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Graphic Chips maker NVidia reported better than expected third quarter earnings and revenue after the close Wednesday. $NVDA said their reach is beyond the cloud, to the edge, where GPU-accelerated 5G, AI and IoT will revolutionize the world’s largest industries..

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NVIDIA Corporation NASDAQ: NVDA: Report Earnings After Close Thursday

 $1.78 Beat $1.58 EPS AND $3.01 Beat $2.92 billion forecast in revenue

Earnings 

NVidia reported fiscal third quarter earnings after the close Thursday of Q3 Non-GAAP EPS of $1.78 beats by $0.20; GAAP EPS of $1.45 beats by $0.20 on revenue of $3.01B (-5.3% Y/Y) beats by $90M. Analysts expected NVDA to report earnings of $1.58 per share on revenue of $2.92 billion. This compares to earnings of $1.84 per share on revenue of $3.18 billion.

Nvidia last quarter warned and said it has struggled with lower demand for graphic cards following a slump in the cryptocurrency space. The company has seen weak revenues in its gaming and data center businesses over the past two quarters.

The demand in gaming chips picked up during the third quarter helped by new products and technologies. The demand for data center components seems to have also gained momentum during the quarter and helped topline results. NVIDIA’s investments in artificial intelligence capabilities also bode well as there is increasing growth potential in this space.

 

NVIDIA Corporation NASDAQ: NVDA

Market Reaction - After Hours After hours 212.01 +2.22 (+1.06%)

Highlights

“Our gaming business and demand from hyperscale customers powered Q3’s results,“ said Jensen Huang, founder and CEO of NVIDIA. “The realism of computer graphics is taking a giant leap forward with NVIDIA RTX.

“This quarter, we have laid the foundation for where AI will ultimately make the greatest impact. We extended our reach beyond the cloud, to the edge, where GPU-accelerated 5G, AI and IoT will revolutionize the world’s largest industries. We see strong data center growth ahead, driven by the rise of conversational AI and inference.”

The company will return to repurchasing its stock after closing the acquisition of Mellanox Technologies, Ltd. Although discussions with the European Union and China regulatory bodies are progressing and closing the acquisition is possible by the end of this calendar year, the company believes the closing will likely occur in the early part of calendar 2020.

Gaming

  • Announced with Microsoft that Minecraft, the world’s most popular computer game, will feature ray tracing.
  • Announced SUPER versions of GeForce GTX TM GPUs with GeForce GTX 1650 SUPER, and GeForce GTX 1660 SUPER, successor to GeForce GTX 1060, the world’s best-selling GPU.
  • Introduced the RTX Broadcast Engine, which uses the AI capabilities of GeForce RTX GPUs to enable virtual greenscreens, filters and AR effects in livestreaming.
  • Announced two new models of the SHIELD TV streaming media player, which bring unmatched levels of home entertainment, gaming and AI capabilities to the living room.
  • Expanded the reach of GeForce NOW TM game streaming, with the service announced by Taiwan Mobile and Russia’s Rostelcom with GFN.ru, which joined Korea’s LG U+ and Japan’s SoftBank.

Data Center

  • Launched the NVIDIA® EGX Intelligent Edge Computing Platform to bring accelerated AI to retail, manufacturing, telecommunications, logistics and other industries, with Walmart, BMW, NTT East, Procter & Gamble and Samsung Electronics among early adopters.
  • Collaborated with Microsoft to provide an optimized hybrid-cloud platform combining Microsoft Azure software with NVIDIA EGX powered by NVIDIA T4 GPUs to address edge-computing demand. Entered the 5G telecom market, enabling telcos to build high-performing, efficient, virtualized 5G radio access networks using GPUs, in collaboration with Ericsson.
  • Announced a collaboration with Red Hat to deliver software-defined 5G RAN using Red Hat OpenShift and GPU-accelerated servers. Won the first inference benchmark, MLPerf Inference 0.5, measuring AI workload performance in data centers and at the edge.
  • Partnered with VMware to accelerate VMware Cloud on AWS using NVIDIA T4 GPUs and introduced the new NVIDIA vComputeServer software for enterprises to run AI workloads on GPU servers in virtualized environments.
  • Announced that the United States Postal Service will use NVIDIA AI technology to improve its package data-processing efficiency.

Professional Visualization

Announced that more than 40 creative and design applications, including three from Adobe -- Adobe Dimension, Substance Alchemist and Premiere Pro -- are now accelerated by RTX ray tracing.

Edge Computing

Introduced Jetson Xavier™ NX, the world’s smallest, most powerful AI supercomputer for robotic and embedded computing devices at the edge.

Outlook

NVIDIA’s outlook for the fourth quarter of fiscal 2020 does not include any contribution from the pending acquisition of Mellanox and is as follows:

  • Revenue is expected to be $2.95 billion, plus or minus 2 percent.
  • Strong sequential growth is expected in Data Center, offset by a seasonal decline in GeForce® notebook GPUs and SoC modules for gaming platforms.
  • GAAP and non-GAAP gross margins are expected to be 64.1 percent and 64.5 percent, respectively, plus or minus 50 basis points.
  • GAAP and non-GAAP operating expenses are expected to be approximately $1.02 billion and $805 million, respectively. GAAP and non-GAAP other income and expense are both expected to be income of approximately $25 million.
  • GAAP and non-GAAP tax rates are both expected to be 9 percent, plus or minus 1 percent, excluding any discrete items.
  • GAAP discrete items include excess tax benefits or deficiencies related to stock-based compensation, which are expected to generate variability on a quarter by quarter basis.

 

NVIDIA Corporation Q2 Earnings Recap

$1.24 Beat $1.15 EPS AND $2.58 billion Beat $2.54 billion forecast in revenue

Earnings 

Nvidia reported better-than-expected fiscal-second quarter earnings of $1.24 per share, excluding certain items, vs. $1.15 per share as expected by analysts, according to Refinitiv. Revenue was $2.58 billion, vs. $2.54 billion as expected by analysts, according to Refinitiv.

Jensen Huang, CEO of Nvidia, said, “We achieved sequential growth across our platforms. Real-time ray tracing is the most important graphics innovation in a decade. Adoption has reached a tipping point, with NVIDIA RTX leading the way.”

NVIDIA Corporation NASDAQ: NVDA

Market Reaction - After Hours $156.40 +$7.63 (+5.13%)

“While sales for internal hyperscale use were muted, the engineering focus on AI is growing,” Nvidia’s chief financial officer, Colette Kress, said on a conference call with analysts on Thursday.

Highlights

  • Nvidia’s biggest segment, gaming, produced $1.31 billion in venue, down 27% on an annualized basis and just above the $1.30 billion consensus estimate among analysts surveyed by FactSet.
  • Nvidia saw fewer shipments of graphics cards for desktop PCs and system-on-chip components for gaming systems.
  • The data center segment came in with $655 million in revenue, down 14% on an annualized basis and less than the $668.5 million FactSet consensus.
  • Nvidia cited a decline in revenue from “hyperscale” customers like cloud infrastructure providers.

NVIDIA Corp. Q2 2020 earnings results

Dividends and Buybacks

The company said it will pay the next quarterly cash dividend of $0.16 per share on September 20, 2019, to all shareholders of record on August 29, 2019.

It will resume repurchasing stocks after the completion of the recently announced acquisition of Mellanox Technologies, which is the first priority as far as capital spending is concerned. The regulatory approval process for the transaction is progressing as planned. It is expected to close by the end of this calendar year.

Outlook

With respect to guidance, Nvidia says that in the fiscal third quarter it expects $2.90 billion in revenue, plus or minus 2%. That’s below the $2.97 billion consensus estimate among analysts polled by Refinitiv.

Nvidia said it estimates gross margin in the fiscal third quarter to be 62.5%, plus or minus 50 basis points; analysts polled by FactSet had been looking for 60.2%.

Analysts

Wedbush Securities

In a Tuesday note Matt Bryson of Wedbush Securities told clients that there are reasons to be optimistic about a return to normalcy in the second half of 2019. He pointed to pickup of Nintendo products containing Nvidia components and the introduction of the Nintendo Switch Lite console.

“Our meeting with [PC maker] Maingear indicated NVDA continues to dominate the high end/custom PC GPU market and is holding share vs. AMD, ” wrote Bryson, who has an outperform rating on Nvidia stock.

Source: NVidia, AlphaStreet

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