GPRO GoPro Inc

Ambarella Inc., a key chip supplier to struggling GoPro Inc., on Thursday reported sharp declines in revenue and earnings in its fiscal first quarter, citing "near term headwinds" in the wearable sports camera market.

Still, shares of Ambarella, down about 54% over the past year, jumped 10% to $46.73 in after-hours trading as the company exceeded Wall Street's profit expectations.

Ambarella makes image-processing chips used in digital camera products. The company counts law enforcement, home security and drones among its markets, but its business with GoPro is significant.

Fermi Wang, chief executive of Ambarella, said the headwinds in the wearable sports camera market would continue, while the company also would likely endure some supply-chain disruptions linked to the April earthquake in Japan.

Last month, GoPro Inc. swung to a loss in the first quarter and delayed the launch of its first drone. The drone delay added to GoPro's string of problems launching recent products. Last year, GoPro slashed the price by half of its entry-level camera, the Hero 4 Session, to entice consumers.

For the quarter ended April 30, Ambarella reported profit fell to $1.8 million, or 5 cents a share, from $18.9 million, or 56 cents a share, a year earlier. On an adjusted basis, earnings were 34 cents a share, down from 71 cents a share.

Sales fell 19.5% to $57.2 million.

Analyst surveyed by Thomson Reuters had expected adjusted profit of 28 cents a share on $57 million in revenue.

Ambarella also announced that it has authorized the repurchase of up to $75 million of its shares over a six-month period beginning in the second quarter.

Write to Ezequiel Minaya at ezequiel.minaya@wsj.com

(END) Dow Jones Newswires

June 02, 2016 18:55 ET (22:55 GMT)

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