NVIDIA (NVDA) Q1 Earnings Top, Revenues Miss, Q2 View Upbeat
Zacks Investment Research | May 16, 2019 11:51PM ET
NVIDIA (NASDAQ:NVDA) delivered first-quarter fiscal 2020 non-GAAP earnings per share of 88 cents, which topped the Zacks Consensus Estimate of 82 cents but tumbled 57% from the year-ago period. However, the metric improved 10% sequentially.
Meanwhile, revenues declined 31% year over year to $2.21 billion and also lagged the Zacks Consensus Estimate of $2.25 billion. Excess channel inventory post-crypto coupled with recent deteriorating end-market conditions impacted results.
While growth across Professional Visualization and Automotive segments was positive, a sharp downtrend in the Gaming and Data Center segment was a spoiler.
However, the company expects the second half to be stronger than the first. Further, the bullish guidance for the fiscal second quarter provided by the management is a respite. The company is expecting a recovery in its core gaming segment, backed by solid growth in mid-end gaming.
Notably, for the fiscal second quarter, NVIDIA anticipates revenues of $2.55 billion (+/-2%), above the current Zacks Consensus Estimate of $2.51 billion.
Top-Line Details
Revenues at the GPU Business fell 27% year over year to $2.02 billion, reflecting deterioration in gaming and data center GPUs as well as zero revenues from cryptocurrency mining processors. However, on a sequential basis, the metric inched up 2%.
Tegra Processor Business revenues worth $198 million slumped 55% on a year-over-year basis and 12% sequentially due to lower shipments of SOC modules for gaming platforms.
On the basis of market platform, Gaming revenues were down 39% on a year-over-year basis to $1.06 billion. However, it was up 11% sequentially.
Reduction of GPU channel inventory following tepid demand from crypto miners is a persistent overhang. Lower sales of Nintendo (OTC:NTDOY) Switch processor were a dampener too.
However, the company is benefiting from the growing sales of Turing-powered GPUs. To this end, the launch of mid-range GeForce products is a tailwind. In fact, strong demand for the gaming laptop is an upside for the company. Moreover, the rising momentum in the games supporting the ray-tracing feature is a positive. Further, NVIDIA RTX finds a strong support in Microsoft (NASDAQ:MSFT) DXR, Epic Games, Unity, Adobe (NASDAQ:ADBE) and Autodesk (NASDAQ:ADSK).
Meanwhile, revenues from Data Center decreased 10% year over year and 7% sequentially to $634 million due to pause in hyperscale spending. Moreover, softness in demand from some enterprise clients was a downside.
Nonetheless, growing demand for Nvidia's Tesla (NASDAQ:TSLA) T4 GPU is an uptrend. Growth in inference revenues, bolstered by a broad-based adoption across a number of hyperscale cloud providers, such as Amazon (NASDAQ:AMZN) , Baidu, Google (NASDAQ:GOOGL), Tencent and Alibaba (NYSE:BABA) and consumer internet companies like LinkedIn (NYSE:LNKD), Expedia (NASDAQ:EXPE), PayPal, Pinterest (NYSE:PINS), Snap and Twitter, is a tailwind.
Automotive revenues in the reported quarter totaled $166 million, reflecting a 14% year-over-year and a 2% sequential rise. This improvement was driven by autonomous vehicle development deals and the increasing uptake of AI-based smart cockpit infotainment solutions.
Moving to Professional Visualization, revenues climbed 6% year over year but were down 9% sequentially to $266 million. Strength across both desktop and mobile workstation products is a key driver. Expansion of these technologies across industries like public sector, oil and gas, and manufacturing is a vital catalyst. Management mentions that applications in the fields like AI, AR and VR contributed 38% to pro visualization revenues.
OEM and IP revenues plunged 74% year over year and 15% sequentially to $99 million due to absence of crypto-currency mining GPU sales.
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