Executive Summary
For Q3 2023, NVIDIA Corporation (NVDA) reported revenues of $5.93 billion, reflecting a 12% decline sequentially and 17% year-over-year, primarily affected by inventory adjustments in gaming and external macroeconomic challenges. Conversely, the data center and automotive segments showed resilience, generating record revenues of $3.83 billion (up 31% YoY) and $251 million (up 86% YoY), respectively. CEO Jen-Hsun Huang emphasized during the earnings call that the demand for AI-related products, particularly from cloud service providers and enterprises, remains robust despite broader market challenges. However, the company faces headwinds due to inventory corrections and new export restrictions impacting its operations in China, which could affect future revenue growth.
Key Performance Indicators
QoQ: -11.53% | YoY:-16.50%
QoQ: 20.44% | YoY:-77.50%
Key Insights
Revenue: $5.93 billion, down 17% YoY and 12% QoQ.
Data Center Revenue: $3.83 billion, up 31% YoY, indicating increasing demand for AI-driven projects.
Net Income: $680 million, representing a net income margin of 11.5%, down significantly year-over-year.
Gross Margin: 53.6%, slightly down from the previous year, attributed to inventory write-downs of $702 million. The operating expenses increased by 31% YoY, reflecting ongoing investment in R&D, highlighting the company's proactive a...
Financial Highlights
Revenue: $5.93 billion, down 17% YoY and 12% QoQ.
Data Center Revenue: $3.83 billion, up 31% YoY, indicating increasing demand for AI-driven projects.
Net Income: $680 million, representing a net income margin of 11.5%, down significantly year-over-year.
Gross Margin: 53.6%, slightly down from the previous year, attributed to inventory write-downs of $702 million. The operating expenses increased by 31% YoY, reflecting ongoing investment in R&D, highlighting the company's proactive approach to innovation amid challenging revenue conditions.
The effective tax rate showed a notable negative value of -10.9%, indicating tax benefits likely from carryforwards or adjustments.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
5.93B |
-16.50% |
-11.53% |
| Gross Profit |
3.18B |
-31.40% |
8.99% |
| Operating Income |
601.00M |
-77.50% |
20.44% |
| Net Income |
680.00M |
-72.40% |
3.66% |
| EPS |
0.03 |
-97.27% |
3.85% |
Key Financial Ratios
operatingProfitMargin
10.1%
operatingCashFlowPerShare
$0.02
freeCashFlowPerShare
$-0.01
dividendPayoutRatio
14.7%
priceEarningsRatio
123.24
Management Commentary
1. Strategy and Innovation: Jen-Hsun Huang emphasized the company's focus on AI and how its infrastructure will adapt to meet surging demands, stating, 'Accelerated computing is recognized generally as the path forward as general-purpose computing slows.'
2. Market Positioning: Colette Kress noted that while the gaming sector saw a downturn, 'we delivered record data center and automotive revenue,' reinforcing NVIDIA’s diversification strategy beyond gaming.
'The demand is there as we continue to innovate and push our technology further, especially in AI and data centers,' – Jen-Hsun Huang, CEO
— Jen-Hsun Huang
'We returned $3.75 billion to shareholders in share repurchases and dividends, demonstrating our commitment to returning value,' – Colette Kress, CFO
— Colette Kress
Forward Guidance
Management anticipates modest sequential growth for the fourth quarter of fiscal 2023, projecting revenues between $6 billion, plus or minus 2%. The growth is expected to be driven by improvements in automotive and gaming segments, alongside recovery in data center revenues. However, persistent softness in China remains a cautionary factor that investors should monitor closely, as indicated by Kress's statement, 'We expect that to continue in the current quarter.'