Graphic Chips maker NVidia shares plunged almost 20% after $NVDA beat earnings expectations in third quarter earnings BUT missed revenue AND cut revenue guidance after last quarter also cutting FQ3 revenue guidance.
Graphic Chips maker NVidia shares plunged almost 20% after $NVDA beat earnings expectations in third quarter earnings BUT missed revenue AND cut revenue guidance after last quarter also cutting FQ3 revenue guidance.
NVIDIA Corporation NASDAQ: NVDA: Reported Earnings After Close Thursday
$1.84 Beat $1.71 EPS BUT $3.18 billion Missed $3.24 billion forecast in revenue.
Earnings
Nvidia earnings rose 38% year over year to an adjusted $1.84 a share in its third quarter ended Oct. 28 with revenue up 21% to $3.18 billion. This beat analysts expectations of EPS of $1.71 a share but missed on sales of $3.24 billion. However Nvidia cut guidance to sales of $2.7 billion, down 7% from $2.91 billion in the year-earlier period with no specific target for earnings per share. Wall Street had forecast Nvidia to earn $1.81 a share, up just 2%, on sales of $3.4 billion, up 17%.
NVIDIA Corporation NASDAQ: NVDA
Market Reaction – After Hours 164.20 −38.19 (18.87%)
“Our market position and growth opportunities are stronger than ever. During the quarter, we launched new platforms to extend our architecture into new growth markets – RAPIDS for machine learning, RTX Server for film rendering, and the T4 Cloud GPU for hyperscale and cloud,” said CEO Jensen Huang.
Highlights
- Revenues moved up 21% annually to $3.18 billion
- Datacenter 58% growth in Revenue from robust demand for the NVDA’s artificial intelligence solutions.
- Professional Visualization, Gaming and Auto all double-digit growth.
Guidance
NVIDIA’s outlook for the fourth quarter of fiscal 2019 is as follows:
- For the January quarter, Nvidia expects sales of $2.7 billion, down 7% from $2.91 billion in the year-earlier period.
- It did not give a specific target for earnings per share.
- Wall Street forecast Nvidia to earn $1.81 a share, up just 2%, on sales of $3.4 billion, up 17%.
- Management expects unadjusted and adjusted gross margins to be approximately 62.3% and 62.5%, respectively.
- The company is looking for operating expenses of $915 million for the January quarter.
NVIDIA Q2 Earnings Recap
$1.76 Beat $1.67 EPS and $3.12 billion Beat $3.11 billion forecast in revenue.
Earnings
- Record revenue from all platforms – Datacenter, Gaming, Professional Visualization, Automotive
- Revenue of $3.12 billion, up 40 percent from a year ago and slightly beat the $3.11B consensus.
- GAAP EPS of $1.76 beats a $1.67 consensus.
- Datacenter segment revenue grew 83% Y/Y to $760M, beating $744M consensus.
- Gaming segment revenue rose 52% to $1.8B, beating $1.75B consensus.
- OEM and IP segment revenue fell 54% to $116M, well below a $188M on weak crypto demand
- Sequentially, OEM and IP revenue fell 70%. ( Nvidia had guided for its sales of products meant specifically for crypto miners to drop by about two-thirds sequentially. )
- Ahead of the Turing Quadro launches, Professional Visualization revenue (driven by Quadro GPUs) rose 20% Y/Y to $281M, beating a $257M consensus.
- Grew Automotive revenue by 13 percent from a year earlier to $161 million. Announced that Daimler and Bosch have selected NVIDIA’s DRIVE™ platform to bring fully automated and driverless vehicles to city streets, with pilot testing to begin next year in Silicon Valley. Auto-related revenue was forecast to rise 4.2% to $147.9 million Factset said.
NVIDIA Corporation NASDAQ: NVDA
Market Reaction – After Hours 241.79 -15.65 (-6.08%)
Guidance
NVIDIA’s outlook for the third quarter of fiscal 2019 is as follows:
- Revenue is expected to be $3.25 billion, plus or minus two percent.
- GAAP and non-GAAP gross margins are expected to be 62.6 percent and 62.8 percent, respectively, plus or minus 50 basis points.
- GAAP and non-GAAP operating expenses are expected to be approximately $870 million and $730 million, respectively. GAAP and non-GAAP other income and expense are both expected to be income of approximately $20 million.
- GAAP and non-GAAP tax rates are both expected to be 9 percent, plus or minus one 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.
Turing Upgrade
On Monday Nvidia announced the release of its long-awaited upgrade of its Pascal chip architecture, Turing, Most had expected to be announced after earnings at the Gamescom 2018 expo in Germany.
“Turing is Nvidia’s most important innovation in computer graphics in more than a decade,” CEO Huang on Monday at the annual Siggraph conference in Vancouver, Canada. “Hybrid rendering will change the industry, opening up amazing possibilities that enhance our lives with more beautiful designs, richer entertainment and more interactive experiences. The arrival of real-time ray tracing is the Holy Grail of our industry.”
Highlights of NVidia Analyst Day
Analyst Day Highlights
- Double memory now for V100 with new DGX-2 appliance with 2x the number of V100s plus new NVLink switches (showed 10x+ better performance vs. DGX-1).
- Expect a $50 billion TAM (vs $30B) data center market which TensorRT4 with Tensorflow integration helps penetrate.
- RTX (real time ray tracing) which offers material improvements to game and pro viz developers.
- Estimate a $60 Billion LT TAM as every vehicle should be autonomous by 2035, highlighting their simulation solutions.
- Volta chosen by all major server OEM/ODMs and all major public clouds
- 2,000 customers adopt NVIDIA inference platform
- 86 of Top 500 Supercomputers NVIDIA Tesla Accelerated
- Top 15 HPC Apps Accelerated; 550 accelerated apps
- CUDA developers up 75% YoY to 770K
The punters were expecting Volta for gaming to be announced, but it did not materialize given the continued success of Pascal boosted by recent supply constraints. Analysts now believe this will launch mid-year, which is a further positive catalyst in case the crypto downturn in price affect interest there. Note that $AMD does not have this yet either leaving $NVDA remains in a strong position in AI.
Barclays issued a note after the analyst day, key segments and their comments are below:
Barclays on Gaming:
Core gaming trends remain strong helped by recent titles PUBG and Fortnite on top of the continued rise of e-sports. NVDA gained share this year (per Steam and NewZoo) vs. AMD which should be boosted by Volta for consumer (we expect mid-year) with plenty of runway as only 30% of the installed base is on Pascal.
Barclays on Datacenter:
The appetite for GPU acceleration continues to grow as the company believes the TAM is now $50B (from $30B last year), driven by larger inference but also just farther reaching AI apps. Specifically, NVDA is making inroads into new industries such as healthcare (Clara medical imaging) and manufacturing (Isaac for robotics). The generational improvements to V100 and DGX-2 only help access these opportunities.
Barclays on Automotive:
NVDA believes every vehicle will eventually have some level of autonomous and sees a $60B TAM by 2035 ($40B from self-driving cars and $20B from robo-taxis). Xavier just began sampling and seeks to simplify the multiple ECUs in an ADAS car today into one. They also announced Orin, which puts the performance of Pegasus into just 2 chips from 4, and DRIVE SIM to simulate driving miles more safely.
Source: NVidia, AlphaStreet