by Nvidia’s stock has been on a roller coaster since the company last reported profits, hitting a low of just $108 in October before recovering strongly in recent weeks.
Bulls hope the GPU giant’s October quarter (fiscal third quarter) report will provide additional earnings. Among analysts polled by FactSet, the consensus is that Nvidia reports revenue of $5.78 billion (down 19% year over year) and non-GAAP earnings per share of $0.71.
Nvidia typically provides quarterly sales guidance in its earnings reports. For the January quarter, the company’s revenue consensus is $6.07 billion (-21%).
Eric Jhonsa, Real Money’s tech columnist, will live blog about Nvidia’s report, which is expected at 4:20 p.m. Eastern time, along with an earnings call scheduled for 5:00 p.m.
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5:11 p.m. ET: With regard to gaming (hit by major inventory corrections in recent quarters), Kress says Nvidia believes channel inventories are on track to return to normal levels by the end of FQ4. Adds that macro and Chinese lockdowns remain short-term headwinds to demand.
5:08 PM ET: Kress says sales of networking products (included in Data Center) also grew strongly, driven by demand for hyperscalers.
5:07 PM ET: Kress highlights Nvidia’s morning announcement about partnering with Microsoft to build a giant AI supercomputer on Azure, and that the solution will leverage Nvidia’s full AI software stack.
5:05 PM ET: Kress is talking. She starts with a summary of Nvidia’s FQ3 performance. Comments Data center growth has been driven by leading US cloud providers and an expanding array of consumer Internet companies.
She adds that sales of data centers to “vertical industries” (traditional enterprises) were also good and Chinese demand remains weak overall.
5:02 PM ET: IR chief Simona Jankowski reviews Nvidia’s safe harbor statement. Typically, Nvidia’s calls include prepared remarks from CFO Colette Kress, after which Kress and CEO Jensen Huang both have analyst field questions.
5:01 PM ET: The conversation begins.
4:58 p.m. ET: Nvidia ended FQ3 with $13.1 billion in cash/equivalents and $10.9 billion. The cash balance declined $3.89BQ/Q, largely due to buybacks.
4:56 PM ET: Nvidia’s earnings call should begin in a few minutes. I’ll cover it.
4:54 p.m. ET: Notably, Nvidia says the Chinese server GPU sales it lost in FQ3 due to new export controls were “largely offset by sales of alternative products in China.” It will be interesting to hear what is said during the call about the expected demand for these products in the future.
4:51 p.m. ET: Nvidia on the potential impact of Ethereum’s shift to proof-of-stake on gaming GPU demand:
“We believe the recent transition in verifying Ethereum cryptocurrency transactions from proof-of-work to proof-of-stake has reduced the usefulness of GPUs for cryptocurrency mining. This may have contributed to higher aftermarket sales of our GPUs in certain markets, potentially impacting demand for some of our products, particularly in the low-end.”
4:48 p.m. ET: Like some other tech companies, Nvidia is slowing its spending. The company’s non-GAAP operating expenses were $1.79 billion in FQ3 — up 30% year-over-year, but only 3% quarter-over-quarter and slightly below the guidance of $1.82 billion.
For FQ4, Nvidia leads non-GAAP opex slightly down Q/Q to $1.78 billion. GAAP opex, which includes equity comp, is estimated at $2.56 billion versus $2.58 billion in FQ3.
4:44 p.m. ET: Despite recent write-downs, Nvidia ended FQ3 with $4.45 billion in inventory, up from $3.89 billion at the end of FQ2 and $2.23 billion a year earlier. Likely at play: big purchase commitments to TSMC and ongoing production ramps for new gaming and server GPUs.
Prepaid supply deals (TSMC looms large here) were flat Q/Q at $3.14 billion. Nvidia also says it had $2.75 billion in “non-stock purchase commitments,” of which $1.59 billion related to multi-year deals with cloud service providers.
4:40 PM ET: Due to OEM inventory adjustments, ProViz revenue (driven by workstation GPU sales) declined 60% Q/Q and 65% Y/Y to $200 million, below a consensus of $363 million.
Automotive revenue (benefited from manufacturing disasters for Nvidia’s Drive ADAS/autonomous driving platform) rose 14% Q/Q and 86% Y/Y to $251 million, beating the $229 million consensus.
OEM and other revenues (including sales of Jetson edge computing offerings and non-gaming GPUs, and are also hurt by inventory corrections) fell 48% Q/Q and 69% Y/Y to $73 million, under a consensus of $128 million.
4:36 p.m. ET: Nvidia is now up 1.3% AH to $161.20. Rivals AMD and Intel are up 0.6%.
4:34 p.m. ET: The reason EPS missed estimates despite a revenue decline and buybacks: Nvidia’s non-GAAP gross margin was 56.1% — up from 45.9% in FQ2, but down from 67% a year ago and below the guideline of 65% (plus or minus 50 basis points).
In its CFO commentary, Nvidia notes that its GM was hurt by inventory costs of $702 million (following $1.32 billion in costs in FQ2). The company is targeting its GM to recover to 66% (plus or minus 50 basis points) in FQ4.
4:27 PM ET: Notably, Nvidia spent $3.65 billion buying back shares in FQ3. That follows $3.34 billion in buybacks in FQ2.
4:26 PM ET: Gaming revenue declined 23% Q/Q and 51% Y/Y to $1.57 billion. But it surpassed a consensus of $1.42 billion.
4:24 PM ET: Likely to be well received by investors: Despite China’s new restrictions, Nvidia’s data center revenue was $3.83 billion — up 1% quarter-on-quarter and 31% year-over-year, and above a consensus of $3.72 billion.
4:22 PM ET: Nvidia estimates FQ4 revenue of $6 billion, plus or minus 2%. That’s below a consensus of $6.07 billion.
Shares are up 3.2% after closing.
4:21 PM ET: Results are known. FQ3 revenue of $5.93 billion surpasses consensus of $5.78 billion. Non-GAAP EPS of $0.58 misses consensus of $0.71.
4:10 p.m. ET: FQ3 consensus estimates for Nvidia’s product segments:
Data Center – $3.72 billion (+27% Y/Y)
Gaming – $1.42 billion (-56%)
Professional Visualization – $363 million (-37%)
Automotive – $229 million (+70%)
OEM & IP – $128 million (-45%)
With very low near-term expectations from Gaming and ProViz (both segments also expected to see large year-over-year revenue declines in FQ4), Data Center’s performance (hurt by China but benefiting from strong US cloud capex ) very much in the spotlight directly.
4:03 p.m. ET: Stocks enter earnings down 46% YTD. However, despite today’s drop, they are up 47% from an October low of $108.13.
4:01 p.m. ET: Amid a broader share price decline in the tech sector and chips, Nvidia closed down 4.5% to $159.10 today. The FQ3 report is expected at 4:20 ET.
3:57 p.m. ET: Note: Nvidia previously warned that new export restrictions on server GPU sales to China could impact FQ3 sales by up to $400 million. Between this and continued gaming GPU pressure, informal expectations for Nvidia’s results and guidance may be below consensus estimates.
3:54 p.m. ET: The FactSet consensus is that Nvidia reports FQ3 revenue of $5.78 billion and non-GAAP earnings per share of $0.71.
For FQ4 (quarterly sales guidance must be included in the report), the revenue consensus is $6.07 billion.
3:51 p.m. ET: Hello, this is Eric Jonsa. I will blog and call the Nvidia earnings report live.
