Nvidia reports Q3 revenue of $5.93B, down 17%

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Nvidia reported earnings for the third fiscal quarter ended October 30 amid a slowdown in PC and gaming sales as well as restrictions on what it can sell to China.

The Santa Clara, California-based company reported revenue for the third fiscal quarter of $5.93 billion, down 17% from a year ago and down 12% from the previous quarter.

GAAP earnings per diluted share for the quarter were 27 cents, down 72% from a year ago and up 4% from the previous quarter. Non-GAAP earnings per diluted share were 58 cents, down 50% from a year ago and up 14% from the previous quarter.

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A downturn started in the previous quarter. The previous quarter’s financial results for revenues met diminished expectations, which were set after Nvidia warned that its quarterly results would be weaker than expected.

The company’s business in game graphics and artificial intelligence (AI) chips saw huge growth in 2020 and 2021 during the pandemic, but now things are slowing down in gaming. In after-hours trading, Nvidia’s stock is up 1.7% to $161.65 a share.

Analysts expected revenue of $5.77 billion (compared to $7.1 billion a year ago) and earnings per share came in at 69 cents on a GAAP basis.

For the data center, analysts expected $3.7 billion versus $2.9 billion last year. And for gaming they expected $1.3 billion versus $3.22 billion last year.

Actual third-quarter revenue was $3.83 billion, up 31% from a year ago and up 1% from the previous quarter. Actual third-quarter revenue for gaming was $1.57 billion, down 51% from a year ago and down 23% from the previous quarter.

Nvidia began to struggle this summer as it warned investors on August 8 that the company was going to miss on its own expectations for the quarter as gaming sales weakened. Nvidia saw softness due to the war in Ukraine and a slowdown in China, with macroeconomic slowdowns around the world affecting consumer demand in a negative way.

The company said it is unable to determine what impact slipping demand for crypto mining had on the lower revenues, but that may have been a drag as well.

“We are quickly adapting to the macro environment, correcting inventory levels and paving the way for new products,” said Jensen Huang, founder and CEO of Nvidia, in a statement. “The ramp of our new platforms ― Ada Lovelace RTX graphics, Hopper AI computing, BlueField and Quantum networking, Orin for autonomous vehicles and robotics, and Omniverse ― is off to a great start and forms the foundation of our next phase of growth.”

He added, “Nvidia’s pioneering work in accelerated computing is more vital than ever. Limited by physics, general-purpose computing has slowed to a crawl, just as AI demands more computing. Accelerated computing lets companies achieve orders-of-magnitude increases in productivity while saving money and the environment.”

Jensen Huang, CEO of Nvidia, speaking at the GTC22 keynote.Jensen Huang, CEO of Nvidia, speaking at the GTC22 keynote.
Jensen Huang, CEO of Nvidia, speaking at the GTC22 keynote.

Outlook

Nvidia’s outlook for the fourth fiscal quarter ending January 31 is as follows:

  • Revenue is expected to be $6.00 billion, plus or minus 2%.
  • GAAP and non-GAAP gross margins are expected to be 63.2% and 66.0%, respectively, plus or minus 50 basis points.
  • GAAP and non-GAAP operating expenses are expected to be approximately $2.56 billion and $1.78 billion, respectively.
  • GAAP and non-GAAP other income and expenses are expected to be an income of approximately $40 million, excluding gains and losses from non-affiliated investments.
  • GAAP and non-GAAP tax rates are expected to be 9.0%, plus or minus 1%, excluding any discrete items.

Data center revenue

Third-quarter revenue was $3.83 billion, up 31% from a year ago and up 1% from the previous quarter.

Nvidia began shipping its H100 Tensor Core GPU based on the new Nvidia Hopper architecture in the quarter, with first systems available now.

Gaming and visualization

Third-quarter revenue was $1.57 billion, down 51% from a year ago and down 23% from the previous quarter.

In the quarter, Nvidia launched GeForce RTX 4090, the first Ada Lovelace architecture GPU for gamers and creators, which quickly sold out in many locations. Sales began today of the RTX 4080.

Third-quarter revenue for professional visualization was $200 million, down 65% from a year ago and down 60% from the previous quarter.

Automotive and embedded

Third-quarter revenue for automotive was $251 million, up 86% from a year ago and up 14% from the previous quarter.

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