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Strategic Education, Inc. Reports Second Quarter 2025 Results
Strategic Education, Inc. Reports Second Quarter 2025 Results

Globe and Mail

time30-07-2025

  • Business
  • Globe and Mail

Strategic Education, Inc. Reports Second Quarter 2025 Results

Strategic Education, Inc. (Strategic Education) (NASDAQ: STRA) today announced financial results for the period ended June 30, 2025. Three Months Ended June 30 Revenue increased 2.9% to $321.5 million compared to $312.3 million for the same period in 2024, driven by strength within the Education Technology Services segment. Revenue on a constant currency basis, which is a non-GAAP financial measure, increased 3.6% to $323.5 million in the second quarter of 2025 compared to $312.3 million for the same period in 2024. For more details on non-GAAP financial measures used in this press release, refer to the information in the Non-GAAP Financial Measures section of this press release. Income from operations was $45.8 million or 14.2% of revenue, compared to $41.9 million or 13.4% of revenue for the same period in 2024. Adjusted income from operations on a constant currency basis, which is a non-GAAP financial measure, was $49.1 million compared to $43.9 million for the same period in 2024. The adjusted operating income margin on a constant currency basis, which is a non-GAAP financial measure, was 15.2% compared to 14.1% for the same period in 2024. Net income was $32.3 million compared to $29.9 million for the same period in 2024. Adjusted net income on a constant currency basis, which is a non-GAAP financial measure, was $36.2 million compared to $32.3 million for the same period in 2024. Adjusted EBITDA, which is a non-GAAP financial measure, was $68.3 million compared to $63.3 million for the same period in 2024. Diluted earnings per share was $1.37 compared to $1.24 for the same period in 2024. Adjusted diluted earnings per share on a constant currency basis, which is a non-GAAP financial measure, increased to $1.54 from $1.33 for the same period in 2024. Diluted weighted average shares outstanding decreased to 23,516,000 from 24,179,000 for the same period in 2024. During the three months ended June 30, 2025, the Company repurchased 325,844 shares of common stock for $28.0 million, and has repurchased 717,146 shares for $60.0 million through the first six months of 2025. Education Technology Services Segment Highlights The Education Technology Services segment (ETS) is comprised primarily of Enterprise Partnerships, Sophia Learning, and Workforce Edge. For the second quarter, average total subscribers at Sophia Learning increased approximately 40% from the same period in 2024, and Sophia Learning revenue increased 39.8% to $16.4 million compared to $11.7 million for the same period in 2024. As of June 30, 2025, Workforce Edge had a total of 80 corporate agreements, collectively employing approximately 3,870,000 employees. ETS revenue increased 49.6% to $36.7 million in the second quarter of 2025 compared to $24.5 million for the same period in 2024, driven by growth in Sophia Learning subscriptions, higher employer affiliated enrollment, and revenue from new Workforce Edge employer partnerships. ETS income from operations was $15.0 million in the second quarter of 2025 compared to $10.0 million for the same period in 2024. The operating income margin was 41.0% compared to 40.9% for the same period in 2024. U.S. Higher Education Segment Highlights The U.S. Higher Education segment (USHE) is comprised of Capella University and Strayer University. For the second quarter, student enrollment within USHE decreased 0.8% to 86,339 compared to 87,077 for the same period in 2024. Our ongoing focus on employers is generating consistent growth in employer affiliated enrollment, but in the second quarter was again offset by a decline in unaffiliated enrollment. Employer affiliated enrollment in the second quarter hit a new all-time high of 31.8% of USHE enrollment, up from 29.3% during the same period in 2024. USHE's healthcare portfolio generated strong total enrollment growth during the second quarter, increasing 8% from the same period in 2024 and now comprises 47% of USHE total enrollment compared to 43% for the same period in 2024. Of USHE's total healthcare enrollment, approximately 37% is from employer partners. For the second quarter, FlexPath enrollment was 23% of USHE enrollment compared to 22% for the same period in 2024. Healthcare programs comprise 76% of FlexPath enrollment. Revenue decreased 0.5% to $215.6 million in the second quarter of 2025 compared to $216.6 million for the same period in 2024, driven by lower second quarter student enrollment. Income from operations was $20.8 million in the second quarter of 2025 compared to $19.8 million for the same period in 2024. The operating income margin was 9.6% compared to 9.2% for the same period in 2024. Australia/New Zealand Segment Highlights The Australia/New Zealand segment (ANZ) is comprised of Torrens University, Think Education, and Media Design School. For the second quarter, student enrollment within ANZ decreased 3.1% to 18,524 compared to 19,113 for the same period in 2024. Lower international enrollment, resulting from regulatory changes in Australia, was partially offset by progress growing domestic enrollment, which is expected to be a bigger driver of future growth. Revenue decreased 2.8% to $69.1 million in the second quarter of 2025 compared to $71.1 million for the same period in 2024, driven by lower second quarter student enrollment. Revenue on a constant currency basis, which is a non-GAAP financial measure, increased slightly to $71.2 million in the second quarter of 2025 compared to $71.1 million for the same period in 2024, driven by higher second quarter revenue per student. Income from operations was $12.8 million in the second quarter of 2025 compared to $14.1 million for the same period in 2024. The operating income margin was 18.4% compared to 19.8% for the same period in 2024. Income from operations on a constant currency basis, which is a non-GAAP financial measure, was $13.3 million in the second quarter of 2025 compared to $14.1 million for the same period in 2024. The operating income margin on a constant currency basis, which is a non-GAAP financial measure, was 18.6% compared to 19.8% for the same period in 2024. BALANCE SHEET AND CASH FLOW At June 30, 2025, Strategic Education had cash, cash equivalents, and marketable securities of $179.9 million and no debt outstanding under its revolving credit facility. For the first six months of 2025, cash provided by operations was $98.9 million compared to $101.9 million for the same period in 2024. Capital expenditures for the first six months of 2025 were $21.2 million compared to $19.9 million for the same period in 2024. Capital expenditures including cloud computing investments, which flow through operating cash flow within other assets, for the first six months of 2025 were $29.7 million compared to $25.9 million for the same period in 2024. Free cash flow for the first six months of 2025, which is a non-GAAP financial measure, was $77.7 million compared to $82.0 million for the same period in 2024. For the second quarter of 2025, consolidated bad debt expense as a percentage of revenue was 4.0% compared to 4.3% of revenue for the same period in 2024. COMMON STOCK CASH DIVIDEND Strategic Education announced today that it declared a regular, quarterly cash dividend of $0.60 per share of common stock. This dividend will be paid on September 15, 2025 to shareholders of record as of September 5, 2025. Strategic Education will host a conference call to discuss its second quarter 2025 results at 10:00 a.m. (ET) today. This call will be available via webcast. To access the live webcast of the conference call, please go to in the Investor Relations section 15 minutes prior to the start time of the call to register. An earnings release presentation will also be posted to in the Investor Relations section. Following the call, the webcast will be archived and available at in the Investor Relations section. To participate in the live call, investors should register here prior to the call to receive dial-in information and a PIN. About Strategic Education, Inc. Strategic Education, Inc. (NASDAQ: STRA) ( is dedicated to helping advance economic mobility through higher education. We primarily serve working adult students globally through our core focus areas: 1) Education Technology Services, developing and maintaining relationships with employers to build education benefits programs providing employees access to affordable and industry-relevant training, certificate, and degree programs, including through Workforce Edge, a full-service education benefits administration solution for employers, and Sophia Learning, which offers low-cost online general education-level courses that are ACE-recommended for college credit; 2) U.S. Higher Education, including Capella University and Strayer University, each institutionally accredited, and collectively offer flexible and affordable associate, bachelor's, master's, and doctoral programs including the Jack Welch Management Institute at Strayer University, and non-degree web and mobile application development courses through Strayer University's Hackbright Academy and Devmountain; and 3) Australia/New Zealand, comprised of Torrens University, Think Education, and Media Design School that collectively offer certificate and degree programs in Australia and New Zealand. This portfolio of high quality, innovative, relevant, and affordable programs and institutions helps our students prepare for success in today's workforce and find a path to bettering their lives. Forward-Looking Statements This communication contains certain 'forward-looking statements' within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by the use of words such as 'expect,' 'estimate,' 'assume,' 'believe,' 'anticipate,' 'may,' 'will,' 'forecast,' 'outlook,' 'plan,' 'project,' 'potential' and other similar words, and include all statements that are not historical facts, including with respect to, among other things, the future financial performance and growth opportunities of Strategic Education; Strategic Education's plans, strategies and prospects; and future events and expectations. The statements are based on Strategic Education's current expectations and are subject to a number of assumptions, uncertainties and risks, including but not limited to: the pace of student enrollment; Strategic Education's continued compliance with Title IV of the Higher Education Act, and the regulations thereunder, as well as other federal laws and regulations, institutional accreditation standards and state regulatory requirements; legislation and other actions by the U.S. Congress, actions by the current administration, rulemaking and other action by the Department of Education or other governmental entities, including without limitation action related to Title IV programs, Department of Education staffing levels, borrower defense to repayment applications, gainful employment or similar measures, 90/10, increased focus by governmental entities on for-profit education institutions, and including actions by governmental entities in Australia and New Zealand; competitive factors; risks associated with the opening of new campuses; risks associated with the offering of new educational programs and adapting to other changes; risks associated with the acquisition of existing educational institutions, including Strategic Education's acquisition of Torrens University and associated assets in Australia and New Zealand; the risk that the benefits of the acquisition of Torrens University and associated assets in Australia and New Zealand may not be fully realized or may take longer to realize than expected; the risk that the acquisition of Torrens University and associated assets in Australia and New Zealand may not advance Strategic Education's business strategy and growth strategy; risks relating to the timing of regulatory approvals; Strategic Education's ability to implement its growth strategy; the risk that the combined company may experience difficulty integrating employees or operations; risks associated with the ability of Strategic Education's students to finance their education in a timely manner; general economic and market conditions; and additional factors described in Strategic Education's most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Many of these risks, uncertainties and assumptions are beyond Strategic Education's ability to control or predict. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, these forward-looking statements speak only as of the information currently available to Strategic Education on the date they are made, and Strategic Education undertakes no obligation to update or revise forward-looking statements, except as required by law. Actual results may differ materially from those projected in the forward-looking statements. December 31, 2024 June 30, 2 025 ASSETS Current assets: Cash and cash equivalents $ 137,074 $ 133,600 Marketable securities 46,949 31,350 Tuition receivable, net 76,127 97,878 Income taxes receivable — 762 Other current assets 44,793 56,353 Total current assets 304,943 319,943 Property and equipment, net 111,247 111,027 Right-of-use lease assets 103,673 100,049 Marketable securities, non-current 14,981 14,986 Intangible assets 245,098 248,172 Goodwill 1,206,883 1,231,105 Other assets 62,910 66,241 Total assets $ 2,049,735 $ 2,091,523 LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 101,749 $ 99,189 Income taxes payable 2,926 — Contract liabilities 89,563 135,179 Lease liabilities 22,222 20,112 Total current liabilities 216,460 254,480 Deferred income tax liabilities 27,586 27,925 Lease liabilities, non-current 103,004 100,190 Other long-term liabilities 40,186 42,211 Total liabilities 387,236 424,806 Commitments and contingencies Stockholders' equity: Common stock, par value $0.01; 32,000,000 shares authorized; 24,502,385 and 23,948,762 shares issued and outstanding at December 31, 2024 and June 30, 2025, respectively 245 239 Additional paid-in capital 1,532,414 1,489,271 Accumulated other comprehensive loss (88,565 ) (58,869 ) Retained earnings 218,405 236,076 Total stockholders' equity 1,662,499 1,666,717 Total liabilities and stockholders' equity $ 2,049,735 $ 2,091,523 For the six months ended June 30, 2024 2025 Cash flows from operating activities: Net income $ 59,600 $ 62,075 Adjustments to reconcile net income to net cash provided by operating activities: Gain on early termination of operating leases, net (6,166 ) — Amortization of deferred financing costs 280 212 Amortization of investment discount/premium (40 ) (140 ) Depreciation and amortization 22,227 23,198 Deferred income taxes (593 ) (4 ) Stock-based compensation 11,902 11,327 Impairment of right-of-use lease assets — 802 Changes in assets and liabilities: Tuition receivable, net (13,247 ) (20,398 ) Other assets (12,663 ) (13,007 ) Accounts payable and accrued expenses 759 (3,643 ) Income taxes payable and income taxes receivable 74 (3,785 ) Contract liabilities 41,353 44,861 Other liabilities (1,551 ) (2,634 ) Net cash provided by operating activities 101,935 98,864 Cash flows from investing activities: Purchases of property and equipment (19,928 ) (21,151 ) Purchases of marketable securities (8,591 ) (25,804 ) Proceeds from marketable securities 22,525 42,575 Proceeds from other investments 20 — Other investments (96 ) (231 ) Cash paid for acquisition, net of cash acquired (143 ) (16 ) Net cash used in investing activities (6,213 ) (4,627 ) Cash flows from financing activities: Common dividends paid (29,507 ) (29,215 ) Net payments for stock awards (3,514 ) (9,182 ) Repurchase of common stock — (60,032 ) Net cash used in financing activities (33,021 ) (98,429 ) Effect of exchange rate changes on cash, cash equivalents, and restricted cash (534 ) 2,519 Net increase (decrease) in cash, cash equivalents, and restricted cash 62,167 (1,673 ) Cash, cash equivalents, and restricted cash — beginning of period 181,925 146,656 Non-GAAP Financial Measures In our press release and schedules, we report certain financial measures that are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America ('GAAP'). We discuss management's reasons for reporting these non-GAAP measures below, and the press release schedules that follow reconcile the most directly comparable GAAP measure to each non-GAAP measure that we reference. Although management evaluates and presents these non-GAAP measures for the reasons described below, please be aware that these non-GAAP measures have limitations and should not be considered in isolation or as a substitute for total costs and expenses, income from operations, operating margin, income before income taxes, net income, earnings per share or any other comparable financial measure prescribed by GAAP. In addition, we may calculate and/or present these non-GAAP financial measures differently than measures with the same or similar names that other companies report, and as a result, the non-GAAP measures we report may not be comparable to those reported by others. Management uses certain non-GAAP measures to evaluate financial performance because those non-GAAP measures allow for period-over-period comparisons of the Company's ongoing operations before the impact of certain items described below. Management believes this information is useful to investors to compare the Company's results of operations period-over-period. These measures are Adjusted Total Costs and Expenses, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Net Income, Adjusted Diluted Earnings Per Share (EPS), Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), Adjusted EBITDA, and Free Cash Flow. We define Adjusted Total Costs and Expenses, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Net Income, and Adjusted Diluted EPS to exclude (1) severance costs, asset impairment charges, gains on sale of real estate and early termination of leased facilities, and other costs associated with the Company's restructuring activities, (2) income/loss recognized from the Company's investments in partnership interests and other investments, and (3) discrete tax adjustments utilizing adjusted effective income tax rates of 29.5% and 29.0% for the three months ended June 30, 2024 and 2025, respectively. To illustrate currency impacts to operating results, Revenue, Adjusted Total Costs and Expenses, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Net Income, and Adjusted Diluted EPS for the three months ended June 30, 2025 are also presented on a constant currency basis utilizing an exchange rate of 0.66 Australian Dollars to U.S. Dollars, which was the average exchange rate for the same period in 2024. We define EBITDA as net income before other expense, the provision for income taxes, depreciation and amortization, and from this amount in arriving at Adjusted EBITDA we also exclude stock-based compensation expense, amortization expense associated with deferred implementation costs incurred in cloud computing arrangements, and the amounts in (1) above. We define Free Cash Flow as net cash provided by operating activities less purchases of property and equipment. These non-GAAP measures are reconciled to the most directly comparable GAAP measures in the sections that follow. Non-GAAP measures should not be viewed as substitutes for GAAP measures. (1) Reflects severance costs, asset impairment charges, gains on sale of real estate and early termination of leased facilities, and other costs associated with the Company's restructuring activities. (2) Reflects income/loss recognized from the Company's investments in partnership interests and other investments. (3) Reflects tax impacts of the adjustments described above and discrete tax adjustments related to stock-based compensation and other adjustments, utilizing adjusted effective income tax rates of 29.5% and 29.0% for the three months ended June 30, 2024 and 2025, respectively. (1) Reflects non-GAAP adjustments related to restructuring costs, income/loss from other investments, and tax adjustments as described further in the Unaudited Reconciliation of Non-GAAP Financial Measures table above. (2) Reflects an adjustment to translate foreign currency results after the non-GAAP adjustments for the three months ended June 30, 2025 at a constant exchange rate of 0.66 Australian Dollars to U.S. Dollars, which was the average exchange rate for the same period in 2024. (1) Denotes non-GAAP financial measures. Please see the information in the Non-GAAP Financial Measures section of this press release for more detail regarding these adjustments and management's reasons for providing this information. (2) Reflects severance costs, asset impairment charges, gains on sale of real estate and early termination of leased facilities, and other costs associated with the Company's restructuring activities. Excludes $0.7 million of depreciation and amortization expense for the three months ended June 30, 2025 and $0.1 million of stock-based compensation expense for the three months ended June 30, 2024. (1) Denotes a non-GAAP financial measure. Please see the information in the Non-GAAP Financial Measures section of this press release for more detail regarding these adjustments and management's reasons for providing this information.

Should We Standardize Non-GAAP Reporting?
Should We Standardize Non-GAAP Reporting?

Forbes

time14-06-2025

  • Business
  • Forbes

Should We Standardize Non-GAAP Reporting?

There is a weak case at best for standardizing non-financial KPIs such as same store sales. Leave the rest of the existing regulation as is. Standardizing Regulators have long struggled with whether and how to standardize non-GAAP reporting. The SEC, via Regulation G and additional rules in 2016, put in common-sense rules on non-GAAP numbers requiring firms to reconcile the non-GAAP number to the GAAP number. In addition, the SEC requires that: (i) the firm cannot present misleading non-GAAP numbers, defined mostly as excluding normal, recurring, cash operating expenses necessary to operate a firm's business; (ii) the firm cannot present inconsistent non-GAAP measure across periods; (ii) the non-GAAP measure cannot exclude gains; and (iv) non-GAAP numbers should clearly label the adjustment. The policy question is whether we should go beyond this? The FASB has a proposal asking whether they need to do something about standardizing financial KPIs. One hypothesis would be that non-GAAP numbers are not all useless or fudged in that the exclusions and inclusions signal information (however costly). There is a fair amount of academic research supporting this perspective. Some complain that GAAP has become excessively restrictive, and we need to give firms leeway to communicate the idiosyncratic aspects of the business model via non-GAAP numbers. The opposing camp would argue that these adjustments to GAAP numbers are opportunistic, and the policy maker must protect the uninformed investors from such opportunism. So, what should the policy maker do? The reality, I suspect, lies somewhere in the middle. Some exclusions potentially make business sense. One-time items, say a litigation settlement, potentially mess with an analyst's projection of continuing performance. As long as that exclusion is disclosed, I can live with that exclusion. However, excluding depreciation, interest expense and taxes, which are normal business expenses, personally make little business sense to me. I often joke in class with my students, 'imagine a world where the student does not pay interest on student loans, does not pay NYC city, NY state and federal taxes, and pays no rent (loosely the capacity cost or DA in EBITDA). Of course, you are rich after these exclusions.' I suggest a mid-way compromise: (i) leave non-GAAP numbers as is, as long as the firm reconciles the non-GAAP number to the GAAP number and follows the SEC's earlier guidance on consistency; (ii) if there is no comparable GAAP number, such as same store sales or the number of subscribers and customers, there may be some value to standardizing what same store sales might look like, for instance, in the retail industry. Consider same store sales disclosure for Home Depot in the 10-K of 2024 and compare that to Lowes, its closest competitor. Home Depot reports something called, 'comparable sales,' defined as: 'Comparable Sales. Comparable sales is a measure that highlights the performance of our existing locations and websites by measuring the change in net sales for a period over the comparable prior period of equivalent length. Comparable sales includes sales at all locations, physical and online, open greater than 52 weeks (including remodels and relocations) and excludes closed stores. Retail stores become comparable on the Monday following their 52 week of operation. Acquisitions are typically included in comparable sales after they have been owned for more than 52 weeks. Our comparable sales results for fiscal 2024 exclude the 53rd week and compare weeks 1 through 52 in fiscal 2024 to the 52-week period reported for fiscal 2023. The method of calculating comparable sales varies across the retail industry. As a result, our method of calculating comparable sales may not be the same as similarly titled measures reported by other companies. Total comparable sales decreased 1.8% in fiscal 2024, reflecting a 1.0% decrease in comparable customer transactions and a 0.9% decrease in comparable average ticket compared to fiscal 2023.' Lowes reports, in its annual report for 2024, 'A comparable location is defined as a retail location that has been open longer than 13 months. A location that is identified for relocation is no longer considered comparable in the month of its relocation. The relocated location must then remain open longer than 13 months to be considered comparable. A location we have decided to close is no longer considered comparable as of the beginning of the month in which we announce its closing. Operating locations which are sold are included in comparable sales until the date of sale. Comparable sales include online sales, which positively impacted comparable sales in fiscal 2024, fiscal 2023, and fiscal 2022 by approximately 50 basis points, 25 basis points, and 45 basis points, respectively. The comparable sales calculation for fiscal 2022 was calculated using sales for a comparable 52-week period.' Even for two very similar, closely tracked peers such as Home Depot and Lowe's, there are subtle differences in comparability in the 'comparable' sales numbers: One of the challenges of standardizing non-financial KPIs is that these KPIs are likely to differ depending on the industries using them. Retail uses same store sales. Streaming services and cable companies report number of subscribers. Airlines use available seat miles. Does the rule maker want to get into the business of regulating KPIs by industry? Standardization can cause new problems Trevor Harris, emeritus professor at Columbia Business School, my colleague worries, 'standardization of non-GAAP numbers is going to cause more issues. I think part of the general problem is that people want everything in a summary statistic which cannot really work, and we assume all investors use the measures being reported. So, part of the answer is to put some of the responsibility back on investors instead of adding more regulation which will never cover everything. When I created economically consistent measures in Model Ware at Morgan Stanley, there were many cases where I had to arbitrate and provide consistency. No regulation can deal with all the idiosyncrasies in complex companies. Another dimension of this is why is comparability a holy grail? Lowes and Home Depot are more similar, but not homogenous. If people cannot adjust for 52 versus 53 weeks, why add more burden on the companies if they don't operate that way?' An ex-standard setter, who wished to stay anonymous, points out another important wrinkle - the constant pressure from industry to adopt income-increasing metrics or rules that make companies look good: 'If I was in charge of the FASB, I might think twice about taking on such a project. An example was earnings per share. It was the first GAAP metric and at one time was viewed as critical to investment decision making. Because many believed it was critical to investment decision making, the gaming of the standard became a popular sport. So much so, that the FASB was constantly trying to issue guidance to address the most recent scheme to boost EPS. The literature became voluminous and complex. A former FASB Chairman told me that he believed the EPS standard was one of the FASB's biggest mistakes and that in his view the FASB should not set standards for how to compute metrics used by investors.' In sum, there is a weak case at best for some kind of standardization of non-financial KPIs. On balance, I suggest we leave Regulation G and the SEC's 2016 rules as is. In my view, these rules strike a reasonable balance between giving firms discretion to tell their story without giving investors information to detect managerial opportunism.

Ambarella, Inc. Announces First Quarter Fiscal Year 2026 Financial Results
Ambarella, Inc. Announces First Quarter Fiscal Year 2026 Financial Results

Globe and Mail

time29-05-2025

  • Business
  • Globe and Mail

Ambarella, Inc. Announces First Quarter Fiscal Year 2026 Financial Results

SANTA CLARA, Calif., May 29, 2025 (GLOBE NEWSWIRE) -- Ambarella, Inc. (NASDAQ: AMBA), an edge AI semiconductor company, today announced first quarter fiscal 2026 financial results for the period ended April 30, 2025. Revenue for the first quarter of fiscal 2026 was $85.9 million, up 57.6% from $54.5 million in the same period in fiscal 2025. Gross margin under U.S. generally accepted accounting principles (GAAP) for the first quarter of fiscal 2026 was 60.0%, compared with 60.9% for the same period in fiscal 2025. GAAP net loss for the first quarter of fiscal 2026 was $24.3 million, or loss per diluted ordinary share of $0.58, compared with a GAAP net loss of $37.9 million, or loss per diluted ordinary share of $0.93, for the same period in fiscal 2025. Financial results on a non-GAAP basis for the first quarter of fiscal 2026 are as follows: Gross margin on a non-GAAP basis for the first quarter of fiscal 2026 was 62.0%, compared with 63.4% for the same period in fiscal 2025. Non-GAAP net profit for the first quarter of fiscal 2026 was $3.0 million, or earnings per diluted ordinary share of $0.07. This compares with non-GAAP net loss of $10.5 million, or loss per diluted ordinary share of $0.26, for the same period in fiscal 2025. Based on information available as of today, Ambarella is offering the following guidance for the second quarter of fiscal year 2026, ending July 31, 2025: Revenue is expected to be between $86.0 million and $94.0 million. Gross margin on a non-GAAP basis is expected to be between 60.5% and 62.0%. Non-GAAP operating expenses are expected to be between $52.5 million and $55.5 million. Ambarella reports gross margin, net income (loss) and earnings (losses) per share in accordance with GAAP and, additionally, on a non-GAAP basis. Non-GAAP financial information excludes the impact of stock-based compensation and acquisition-related costs adjusted for the associated tax impact, which includes the effect of any benefits or shortfalls recognized. A reconciliation of the GAAP to non-GAAP gross margin, net income (loss) and earnings (losses) per share for the periods presented, as well as a description of the items excluded from the non-GAAP calculations, is included in the financial statements portion of this press release. Total cash, cash equivalents and marketable debt securities on hand at the end of the first quarter of fiscal 2026 was $259.4 million, compared with $250.3 million at the end of the prior quarter and $203.3 million at the end of the same quarter a year ago. 'As the established edge AI market leader, we achieved our fourth consecutive quarter of record AI revenue with results in the upper half of our Q1 revenue guidance range. We are increasing our fiscal 2026 revenue growth guidance to a range of 19% to 25%, or approximately $348 million at the mid-point, with the broader guidance range reflecting our consideration of the uncertain geopolitical environment,' said Fermi Wang, President & CEO. 'We continue to innovate at a rapid pace, and by leveraging our low power and scalable 3 rd generation AI silicon and software architecture, our development of a new SoC is efficiently extending our reach into the edge AI infrastructure market.' Stock Repurchase During the second quarter of fiscal year 2026, Ambarella's Board of Directors approved an extension of the current share repurchase program for an additional twelve months ending June 30, 2026. In the first quarter of fiscal year 2026, the company repurchased a total of 24,152 shares for total consideration of approximately $1.0 million. As of today, there is approximately $48.0 million available for repurchase under the company's stock repurchase program. The repurchase program does not obligate the company to acquire any particular amount of ordinary shares, and it may be suspended at any time at the company's discretion. Quarterly Conference Call Ambarella plans to hold a conference call at 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time today with Fermi Wang, President and Chief Executive Officer, and John Young, Chief Financial Officer, to discuss the first quarter of fiscal year 2026 results. A live and archived webcast of the call will be available on Ambarella's website at for up to 30 days after the call. About Ambarella Ambarella's products are used in a wide variety of edge AI and human vision applications, including video security, advanced driver assistance systems (ADAS), electronic mirror, drive recorder, driver/cabin monitoring, autonomous driving and robotics applications. Ambarella's low-power systems-on-chip (SoCs) provide powerful deep neural network processing to enable intelligent perception, fusion and planning, and offer high-resolution video compression, advanced image and radar processing. For more information, please visit "Safe harbor" statement under the Private Securities Litigation Reform Act of 1995 This press release contains forward-looking statements that are not historical facts and often can be identified by terms such as 'outlook,' 'projected,' 'intends,' 'will,' 'estimates,' 'anticipates,' 'expects,' 'believes,' 'could,' 'should,' or similar expressions, including the guidance for the second quarter of fiscal year 2026 ending July 31, 2025, and the comments of our CEO relating to our expectation of future revenue growth, the growth potential for our edge AI inference products, our ability to continue to innovate, and our ability to expand into edge infrastructure. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. Our actual results could differ materially from those predicted or implied and reported results should not be considered as an indication of our future performance. The risks and uncertainties referred to above include, but are not limited to, global economic and political conditions; changes in government policies, including possible trade tariffs and restrictions; revenue being generated from new customers or design wins, neither of which is assured; the commercial success of our customers' products; our customers' ability to manage their inventory requirements; our growth strategy; our ability to anticipate future market demands and future needs of our customers, particularly for AI inference applications; our ability to introduce, and to generate revenue from, new and enhanced solutions; our ability to develop, and to generate revenue from, new advanced technologies, such as computer vision, AI functionality and advanced networks, including vision-language models and GenAI; our ability to retain and expand customer relationships and to achieve design wins; the expansion of our current markets and our ability to successfully enter new markets and applications, such as edge infrastructure; anticipated trends and challenges, including competition, in the markets in which we operate; risks associated with global health conditions and associated risk mitigation measures; our ability to effectively manage growth; our ability to retain key employees; and the potential for intellectual property disputes or other litigation. Further information on these and other factors that could affect our financial results is included in the company's Annual Report on Form 10-K for our 2025 fiscal year, which is on file with the Securities and Exchange Commission. Additional information will also set forth in the company's quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings the company makes with the Securities and Exchange Commission from time to time, copies of which may be obtained by visiting the Investor Relations portion of our web site at or the SEC's web site at Undue reliance should not be placed on the forward-looking statements in this release, which are based on information available to us on the date hereof. The results we report in our Quarterly Report on Form 10-Q for the first fiscal quarter ended April 30, 2025 could differ from the preliminary results announced in this press release. Ambarella assumes no obligation and does not intend to update the forward-looking statements made in this press release, except as required by law. Non-GAAP Financial Measures The company has provided in this release non-GAAP financial information, including non-GAAP gross margin, net income (loss), and earnings (losses) per share, as a supplement to the condensed consolidated financial statements, which are prepared in accordance with generally accepted accounting principles ("GAAP"). Management uses these non-GAAP financial measures internally in analyzing the company's financial results to assess operational performance and liquidity. The company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning, forecasting and analyzing future periods. Further, the company believes these non-GAAP financial measures are useful to investors because they allow for greater transparency with respect to key financial metrics that the company uses in making operating decisions and because the company believes that investors and analysts use them to help assess the health of its business and for comparison to other companies. Non-GAAP results are presented for supplemental informational purposes only for understanding the company's operating results. The non-GAAP information should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from non-GAAP measures used by other companies. With respect to its financial results for the first quarter of fiscal year 2026, the company has provided below reconciliations of its non-GAAP financial measures to its most directly comparable GAAP financial measures. With respect to the company's expectations for the second quarter of fiscal year 2026, a reconciliation of non-GAAP gross margin and non-GAAP operating expenses guidance to the closest corresponding GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the high variability and low visibility with respect to the charges excluded from these non-GAAP measures. We expect the variability of the above charges to have a significant, and potentially unpredictable, impact on our future GAAP financial results. The following tables present details of stock-based compensation and acquisition-related costs included in each functional line item in the condensed consolidated statements of operations above: Three Months Ended April 30, 2025 2024 (unaudited, in thousands) Stock-based compensation: Cost of revenue $ 951 $ 607 Research and development 17,585 17,621 Selling, general and administrative 7,594 7,808 Total stock-based compensation $ 26,130 $ 26,036 Three Months Ended April 30, 2025 2024 (unaudited, in thousands) Acquisition-related costs: Cost of revenue $ 757 $ 757 Research and development — — Selling, general and administrative 456 520 Total acquisition-related costs $ 1,213 $ 1,277 The difference between GAAP and non-GAAP gross margin was 2.0% and 2.5%, or $1.7 million and $1.4 million, for the three months ended April 30, 2025 and 2024, respectively. The differences were due to the effect of stock-based compensation and amortization of acquisition-related costs. AMBARELLA, INC. (in thousands, except share and per share data) Three Months Ended April 30, 2025 2024 (unaudited) GAAP net loss $ (24,328) $ (37,932) Non-GAAP adjustments: Stock-based compensation expense 26,130 26,036 Acquisition-related costs 1,213 1,277 Income tax effect 14 152 Non-GAAP net income (loss) $ 3,029 $ (10,467) GAAP - diluted weighted average shares 42,219,972 40,774,991 Non-GAAP - diluted weighted average shares 42,451,235 40,774,991 GAAP - diluted net loss per share $ (0.58) $ (0.93) Non-GAAP adjustments: Stock-based compensation expense 0.62 0.64 Acquisition-related costs 0.03 0.03 Income tax effect — — AMBARELLA, INC. (unaudited, in thousands) April 30, January 31, 2025 2025 ASSETS Current assets: Cash and cash equivalents $ 141,285 $ 144,622 Marketable debt securities 118,102 105,643 Accounts receivable, net 30,235 29,767 Inventories 39,289 34,428 Restricted cash 441 7 Prepaid expenses and other current assets 6,197 6,084 Total current assets 335,549 320,551 Property and equipment, net 10,248 9,084 Intangible assets, net 44,895 47,279 Operating lease right-of-use assets, net 4,377 5,188 Goodwill 303,625 303,625 Other non-current assets 3,224 3,241 Total assets $ 701,918 $ 688,968 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable 35,290 21,775 Accrued and other current liabilities 73,479 80,781 Operating lease liabilities, current 2,335 2,829 Income taxes payable 1,633 1,383 Deferred revenue, current 12,114 14,226 Total current liabilities 124,851 120,994 Operating lease liabilities, non-current 2,056 2,436 Other long-term liabilities 2,295 4,126 Total liabilities 129,202 127,556 Shareholders' equity: Preference shares — — Ordinary shares 19 19 Additional paid-in capital 848,756 813,683 Accumulated other comprehensive income (loss) 326 (233) Accumulated deficit (276,385) (252,057) Total shareholders' equity 572,716 561,412 Total liabilities and shareholders' equity $ 701,918 $ 688,968 Contact: Louis Gerhardy 408.636.2310 lgerhardy@

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