Real Money’s Eric Jhonsa live-blogs Nvidia’s earnings report and conference call with management.
Two weeks after Nvidia issued a sales and margin warning, all eyes are on the quarterly guidance that’s expected in the company’s Wednesday earnings report.
Among analysts polled by FactSet, the consensus is for Nvidia to report July quarter (fiscal second quarter) revenue of $6.7 billion, GAAP EPS of $0.35 and non-GAAP EPS of $0.50. The revenue consensus matches the figure for the quarter given in Nvidia’s August 8 pre-announcement.
For the October quarter — Nvidia typically shares quarterly sales, margin and expense guidance in its reports — the revenue consensus stands at $6.91 billion (down 3%).
Eric Jhonsa, Real Money’s tech columnist, will be live-blogging Nvidia’s earnings, which is expected at 4:20 P.M. Eastern Time, along with a conference call with management that’s scheduled for 5 P.M.
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4:48 PM ET: Of note: Nvidia says its FQ2 Data Center revenue +61% to $3.81B) “included $287 million for orders originally scheduled for delivery primarily in the third quarter that were converted to second-quarter delivery with extended payment terms.”
At the same time, the company says “a number of second-quarter [Data Center] orders will be fulfilled in the third quarter given supply chain disruptions.”
4:46 PM ET: Professional Visualization revenue (much of it involves workstation GPU sales) was down 20% Q/Q and 4% Y/Y to $496M. Notebook workstation GPU sales rose, but desktop sales fell, “particularly at the high end.”
4:44 PM ET: Nvidia has pulled back a bit: Shares are now down 2.9% AH to $167.31.
4:42 PM ET: Automotive revenue, which rose 59% Q/Q and 45% Y/Y to $220M, benefited from higher demand for “self-driving and AI cockpit solutions,” partly offset by lower “legacy cockpit” (infotainment SoC) revenue.
4:40 PM ET: On the bright side, Nvidia says Data Center segment sales to cloud giants (hyperscalers) nearly doubled Y/Y. Hyperscalers have been an area of strength for a while, thanks in part to the large AI training and inference investments they’re making.
Sales to North American hyperscalers also rose Q/Q, while sales to Chinese hyperscalers fell Q/Q. Sales to “vertical industries” clients (i.e. enterprises) rose Q/Q and Y/Y by an unspecified amount.
4:36 PM ET: As indicated in its warning, Nvidia says gaming GPU sales were hurt by lower sell-in to channel partners (i.e. graphics card makers), as well as “pricing programs with channel partners to address challenging market conditions that are expected to persist into the third quarter.”
4:34 PM ET: Nvidia’s CFO commentary is up. Here’s a table within it that shows segment-level revenue:
4:30 PM ET: Nvidia notes it spent $3.44B on buybacks/dividends in FQ2, and says it plans to continue buybacks in FY23 (ends in Jan. ’23).
The “payments related to repurchases of common stock” line in Nvidia’s cash-flow statement shows $3.35B worth of buyback-related payments.
4:26 PM ET: Also perhaps helping: The company is guiding for an FQ3 non-GAAP gross margin of 65%, plus or minus 50 bps. That suggests it doesn’t expect to take major inventory charges during the quarter.
4:25 PM ET: Perhaps helping out Nvidia’s shares: The company says that while Gaming and Professional Visualization segment revenue is expected to be down Q/Q in FQ3, Data Center and Automotive revenue is expected to be up.
4:24 PM ET: The FQ3 sales guide is well below consensus. But investor expectations were low following Nvidia’s warning. Shares are now up down just 0.6%.
4:22 PM ET: Shares are down 1.9% after-hours.
4:21 PM ET: Results are out. FQ2 revenue of $6.7B matches consensus. Non-GAAP EPS of $0.51 beats by $0.01.
Nvidia guides for FQ3 revenue of $5.9B, plus or minus 2%. That’s below a $6.91B consensus.
4:11 PM ET: One thing to keep an eye on as Nvidia reports: Whether the company will be taking any more inventory-related charges in FQ3.
In its warning, Nvidia said it’s taking $1.32B worth of charges (primarily inventory-related) for FQ2, with the company’s GPU purchase commitments with foundries believed to be the main culprit. Due to the charges, Nvidia forecast an FQ2 non-GAAP gross margin of just 46.1% (+/- 50 bps), well below original guidance of 67.1%.
4:01 PM ET: Nvidia closed up 0.2%. The FQ2 report is expected at 4:20 PM ET.
4:00 PM ET: Along with its FQ3 sales guidance, any commentary Nvidia shares about demand trends for its Gaming and Data Center segments will be closely watched.
In its warning, the company estimated Gaming segment sales were down 33% Y/Y in FQ2, thanks to softer gaming GPU demand and channel inventory corrections. On the flip side, Data Center revenue was estimated to be up 61% Y/Y, thanks in part to strong server GPU demand from cloud giants.
3:56 PM ET: Ahead of the report, Nvidia’s stock is up 0.7% today to $172.90. But shares are still down 41% YTD, thanks to broader tech-sector weakness and concerns about gaming GPU demand trends.
3:53 PM ET: The FactSet consensus is for Nvidia to report FQ2 revenue of $6.7B (in line with the number given in their warning) and non-GAAP EPS of $0.50.
The FQ3 revenue consensus stands at $6.91B, though it’s possible (given Nvidia’s warning) that informal expectations are lower.
3:51 PM ET: Hi, this is Eric Jhonsa. I’ll be live-blogging Nvidia’s earnings report and call.
