Nvidia (NVDA) rallied after earnings using a full-year perspective suggesting that revenues will recover later this year.
On Thursday afternoon, Nvidia reported the January quarter sales of NOK 211 million (down 24% annually) and non-GAAP EPS of $ 0.80 (down 53%). Revenue was in line with the guidance Nvidia issued in its January 28 warning; EPS beats a $ 0.77 consensus.
Nvidia also led revenues of $ 2.2 billion, plus or minus 2%, for the April quarter. This means an annual decline of 31% in the mid-point, and with the qualifier that the investor's expectations appear to have been lower than this, is below a consensus of $ 2.32 billion.
Particularly, despite the quarterly outlook in April, Nvidia forecasts that revenue for its fiscal year 2020, ending in January 2020, will be flat or down slightly. It compares favorably with agreement that revenue will fall by around $ 500 million annually to $ 1
Nvidia rose 5.3% in retrospect to $ 163.30 thanks to the figures. Stocks have made new 2019 heights, but are still down 43% from a fall top of $ 292.76. GPU archrival AMD (AMD), which in January also released a light quarterly view and a healthier full-year view, increased 1.6% to $ 23.50.
Here are some remarkable shopping centers from Nvidia's report and conversation.
1. Gaming-GPU sales plunged, but Nvidia expects a second half of acquisitions
Nvidia's Gaming segment revenue, which covers sales of gaming GPUs and console processors, fell 46% sequentially and 45% annually to $ 954 million. The company reiterated that an overarching GPU inventory overhang that followed a fall in demand from the cryptographers (or perhaps formerly the cryptographers at this point) weighed on sales, and also lowered console processing sales, Chinese power pressure and softer than expected high-end sales. architecture GPUs.
But Nvidia expects fiscal revenue revenues for 2020 to fall only slightly, but the next quarterly game sales are expected to remain soft as the remaining excess inventory is cleared.
The Company sees great demand for notebook game GPUs – not affected by the crypto overhang – helping. It also expects that the demand for Turing GPUs will generally pick up as more games supporting Ture's real-time ray tracing and AI inference capabilities become available. The ratings given this week for the beam tracking impact on the images given by first-person shooter Metro Exodus, one of the first games to support ray tracing, were generally quite positive.
2. Slower Cloud Demand Weighs on Server GPU Sales
Having recorded over 50% growth in previous quarters, Nvidia's Datacenter segment, which covers server GPUs and hardware sales, grew only 12% annually (and fell 14% sequentially) to $ 679 million. CFO Colette Kress called Datacenter the decline a broad-based, which was affected by macro security. But she added that Nvidia saw several major cloud customers pause their orders towards the end of the fiscal year. It is in line with the prospects given by Intel (INTC) and several other cloud providers. (Cloud customers use heavy use of Nvidia's GPUs within their AI / deep learning systems.)
But also in line with prospects provided by other vendors, Kress and CEO Jensen Huang insisted that the cloud burst is a temporary one. And that demand will pick up as shadow giants, continuing to increase its AI-related investments. The fact that cloud computing on the data center construction is still high is an encouraging sign.
Huang also insisted that the competition does not weigh on Nvidia's Datacenter sales, as some shadow giants distribute ASICs for certain AI workloads, and AMD sees its server GPU sales grow from a much smaller base. And he repeatedly stated that Nvidia has four new growth drivers for the Datacenter business: deep learning-interested workloads (which now account for less than 10% of data center revenue). the use of GPUs for server-side graphics rendering (powered by Turing); the adoption of GPU acceleration for computer science and standard machine learning workload (this is enabled by Nvidia's new RAPIDS software platform); and the sale of pre-configured hardware systems that include Nvidia's enterprise GPUs.
3. Workstation and Automotive Sales Remain Healthy
Nvidia's professional visualization (workstation GPU) was increased by 15% to $ 293 million. Kress noted new applications in areas such as computer science, AI and VR content created growth, and there was a demand for thin-and-light workstations.
Car revenue increased 23% to $ 163 million, attributed to "adoption of next-generation AI cockpit solutions and autonomous vehicle development processes," partially offset by lower infotainment processor sales. Nvidia has de-emphasized its infotainment business as it pursues opportunities involving autonomous and semi-autonomous driving systems. Volvo cars with a Nvidia-powered, Level 2 plus, driver assistance system are expected to enter volume production in early 2020.
4. Expenditure on growth is expected to slow down
Thanks to strong growth in R&D spending growth, Nvidia's adjusted operating expenses increased 24% annually in the fourth quarter and 27% across fiscal policy 2019. However, operating expenses are expected to be flat in the first quarter of fiscal policy 2020 in a sequential manner. and grows with only a high-digit figure over the fiscal year 2020.
5. Repurchase is picking up
Three months after adding $ 7 billion to its stock purchase authorization, Nvidia revealed it spent $ 700 million on buybacks. The company has also reiterated its previous goal of spending $ 3 billion on buybacks and dividends by the end of fiscal 2020 (which involves fiscal 2020 spending of $ 2.3 billion).
With Nvidia, which owns $ 5.4 billion in net cash (cash minus debt) and still expected to produce $ 3.4 billion in free cash flow in this fiscal year, the company has plenty of room to further increase its buyback activity if wish for it.
TheStreet Eric Jhonsa has previously covered Nvidia's Income Statement and call through a live blog.