Monday, August 8th 2022
NVIDIA Announces Preliminary Financial Results for Second Quarter Fiscal 2023, Gaming $$ Down 44%
NVIDIA (NASDAQ: NVDA) today announced selected preliminary financial results for the second quarter ended July 31, 2022. Second quarter revenue is expected to be approximately $6.70 billion, down 19% sequentially and up 3% from the prior year, primarily reflecting weaker than forecasted Gaming revenue. Gaming revenue was $2.04 billion, down 44% sequentially and down 33% from the prior year. Data Center revenue was $3.81 billion, up 1% sequentially and up 61% from the prior year.
The shortfall relative to the May revenue outlook of $8.10 billion was primarily attributable to lower sell-in of Gaming products reflecting a reduction in channel partner sales likely due to macroeconomic headwinds. In addition to reducing sell-in, the company implemented pricing programs with channel partners to reflect challenging market conditions that are expected to persist into the third quarter.
Data Center revenue, though a record, was somewhat short of the company's expectations, as it was impacted by supply chain disruptions. Second quarter results are expected to include approximately $1.32 billion of charges, primarily for inventory and related reserves, based on revised expectations of future demand.
"Our gaming product sell-through projections declined significantly as the quarter progressed," said Jensen Huang, founder and CEO of NVIDIA. "As we expect the macroeconomic conditions affecting sell-through to continue, we took actions with our Gaming partners to adjust channel prices and inventory.
"NVIDIA has excellent products and position driving large and growing markets. As we navigate these challenges, we remain focused on the once-in-a-generation opportunity to reinvent computing for the era of AI," he said.
"The significant charges incurred in the quarter reflect previous long-term purchase commitments we made during a time of severe component shortages and our current expectation of ongoing macroeconomic uncertainty," said Colette Kress, EVP and CFO of NVIDIA.
"We believe our long-term gross margin profile is intact. We have slowed operating expense growth, balancing investments for long-term growth while managing near-term profitability. We plan to continue stock buybacks as we foresee strong cash generation and future growth," she said.
The preliminary results for the second quarter ended July 31, 2022, are an estimate, based on information available to management as of the date of this release, and are subject to further changes upon completion of the company's standard quarter and year-end closing procedures. This update does not present all necessary information for an understanding of NVIDIA's financial condition as of the date of this release, or its results of operations for the second quarter. As NVIDIA completes its quarter-end financial close process and finalizes its financial statements for the quarter, it will be required to make significant judgments in a number of areas. It is possible that NVIDIA may identify items that require it to make adjustments to the preliminary financial information set forth above and those changes could be material. NVIDIA does not intend to update such financial information prior to release of its final second quarter financial statement information, which is currently scheduled for Aug. 24, 2022.
The shortfall relative to the May revenue outlook of $8.10 billion was primarily attributable to lower sell-in of Gaming products reflecting a reduction in channel partner sales likely due to macroeconomic headwinds. In addition to reducing sell-in, the company implemented pricing programs with channel partners to reflect challenging market conditions that are expected to persist into the third quarter.
"Our gaming product sell-through projections declined significantly as the quarter progressed," said Jensen Huang, founder and CEO of NVIDIA. "As we expect the macroeconomic conditions affecting sell-through to continue, we took actions with our Gaming partners to adjust channel prices and inventory.
"NVIDIA has excellent products and position driving large and growing markets. As we navigate these challenges, we remain focused on the once-in-a-generation opportunity to reinvent computing for the era of AI," he said.
"The significant charges incurred in the quarter reflect previous long-term purchase commitments we made during a time of severe component shortages and our current expectation of ongoing macroeconomic uncertainty," said Colette Kress, EVP and CFO of NVIDIA.
"We believe our long-term gross margin profile is intact. We have slowed operating expense growth, balancing investments for long-term growth while managing near-term profitability. We plan to continue stock buybacks as we foresee strong cash generation and future growth," she said.
The preliminary results for the second quarter ended July 31, 2022, are an estimate, based on information available to management as of the date of this release, and are subject to further changes upon completion of the company's standard quarter and year-end closing procedures. This update does not present all necessary information for an understanding of NVIDIA's financial condition as of the date of this release, or its results of operations for the second quarter. As NVIDIA completes its quarter-end financial close process and finalizes its financial statements for the quarter, it will be required to make significant judgments in a number of areas. It is possible that NVIDIA may identify items that require it to make adjustments to the preliminary financial information set forth above and those changes could be material. NVIDIA does not intend to update such financial information prior to release of its final second quarter financial statement information, which is currently scheduled for Aug. 24, 2022.
46 Comments on NVIDIA Announces Preliminary Financial Results for Second Quarter Fiscal 2023, Gaming $$ Down 44%
This quarter, Data Center blows by Gaming to take a commanding lead as the business unit generating the most revenue for NVIDIA.
Not only is the crypto party is over but also GPU sales to system builders and their AIB partners for the DIY graphics card market has also shown a big decline. We know that the entire PC market is down on unit sales and we're witnessing AIB graphics card price drops at retail and expanded product availability.
If you are a swing trader, a strong consideration is picking up some shares of NVDA today which is currently -6% or so.
And you know NVIDIA and AMD aren't going to hack off huge chunks of gross margin.
You're going to buying used cards for years.
NVIDIA also has the BlueField DPU, derived from technologies acquired from Mellanox back in 2019. They are working on a datacenter CPU codenamed Grace for anticipated release in 2023.
Remember that NVIDIA is much more than GeForce.
Nvidia is a one foot giant. It will cost them that they couldn't buy ARM. And that's good, because now they will have to focus back to the gamer. Not the gamer's pocket, but the gamer. They'll have to win the gamer again. Until now I was thinking that Nvidia will start 4070 at $800 and 4080 at $1000 if not more. Now there is a chance they'll play nicely.
That makes more sense why Nvidia and AMD's gaming revenues are similar. AMD is making up their lesser PC GPU sales with console APU sales. Nvidia on the other hand is all PC GPU sales regardless whether its OEM/system builder, DIY, or crypto under its Gaming business unit.
I know Nvidia has a separate Professional Visualization business unit for other GPU sales.
Your take is the opposite of reality.
www.vgchartz.com/
Not that popular apparently, given the fact its competitor can push almost as much product without real RT capability. In a way, that includes the consoles too, because they carry PC gaming's product portfolio, and especially would carry one spiced up with RT. Its clear the PC doesn't, on its own.
Goes to show its actually really all about the games, and whatever cards can run them proper.
In terms of the AMD-Nvidia war this is quite a substantial thing. AMD is clawing back share without a feature lead - that's remarkable and not seen before, if I recall correctly.