NVIDIA Drops 17% in Q2 2019 Revenue Compared to 2018; Continues to Set Pace with AI, Cloud Computing & Robotics

NVIDIA reported revenue for the second quarter ended July 28, 2019, of $2.58 billion compared with $3.12 billion a year earlier and $2.22 billion in the previous quarter.

GAAP earnings per diluted share for the quarter were $0.90, compared with $1.76 a year ago and $0.64 in the previous quarter. Non-GAAP earnings per diluted share were $1.24 compared with $1.94 a year earlier and $0.88 in the previous quarter.

“We achieved sequential growth across our platforms,” said Jensen Huang, founder and CEO of NVIDIA. “Real-time ray tracing is the most important graphics innovation in a decade. Adoption has reached a tipping point, with NVIDIA RTX leading the way.

“NVIDIA accelerated computing momentum continues to build as the industry races to enable the next frontier in artificial intelligence, conversational AI, as well as autonomous systems like self-driving vehicles and delivery robots,” he said.

NVIDIA will pay its next quarterly cash dividend of $0.16 per share on September 20, 2019, to all shareholders of record on August 29, 2019. The first priority for the company’s cash balance is the purchase of Mellanox Technologies, Ltd. The company will return to repurchasing its stock after the close of the Mellanox acquisition. The regulatory approval process for this acquisition is progressing as expected, and NVIDIA continues to work toward closing the deal by the end of this calendar year.

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Q2 Fiscal 2020 Summary

GAAP
($ in millions, except earnings per share)	Q2 FY20			Q1 FY20	Q2 FY19		Q/Q	Y/Y
Revenue	$2,579			$2,220	$3,123		Up 16%	Down 17%
Gross margin	59.8%			58.4%	63.3%		Up 140 bps	Down 350 bps
Operating expenses	$970			$938	$818		Up 3%	Up 19%
Operating income	$571			$358	$1,157		Up 59%	Down 51%
Net income	$552			$394	$1,101		Up 40%	Down 50%
Diluted earnings per share	$0.90			$0.64	$1.76		Up 41%	Down 49%

 

Non-GAAP
($ in millions, except earnings per share)	Q2 FY20			Q1 FY20	Q2 FY19		Q/Q	Y/Y
Revenue	$2,579			$2,220	$3,123		Up 16%	Down 17%
Gross margin	60.1%			59.0%	63.5%		Up 110 bps	Down 340 bps
Operating expenses	$749			$753	$692		Down 1%	Up 8%
Operating income	$802			$557	$1,290		Up 44%	Down 38%
Net income	$762			$543	$1,210		Up 40%	Down 37%
Diluted earnings per share	$1.24			$0.88	$1.94		Up 41%	Down 36%

NVIDIA’s outlook for the third quarter of fiscal 2020 is as follows:

• Revenue is expected to be $2.90 billion, plus or minus 2 percent.
• GAAP and non-GAAP gross margins are expected to be 62.0 percent and 62.5 percent, respectively, plus or minus 50 basis points.
• GAAP and non-GAAP operating expenses are expected to be approximately $980 million and $765 million, respectively.
• GAAP and non-GAAP other income and expense are both expected to be income of approximately $25 million.
• GAAP and non-GAAP tax rates are both expected to be 10 percent, plus or minus 1 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.

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Since the end of the first quarter of fiscal 2020, NVIDIA has achieved progress in these areas:

Data Center

• Announced breakthroughs in language understanding that allow organizations to enable real-time conversational AI, with record-setting performance in running training and inference on the BERT AI language model.
• Announced that NVIDIA’s DGX SuperPOD which provides the AI infrastructure for the company’s autonomous-vehicle development program – was ranked the world’s 22nd fastest supercomputer and that its reference architecture is available commercially through partners.
• Set eight records in AI training performance in the latest MLPerf benchmarking tests.
• Announced support for Arm CPUs, providing a new path to build highly energy-efficient, AI-enabled exascale supercomputers.

Gaming

• Supercharged its GPU lineup with GeForce RTX 2060 SUPER™, GeForce RTX 2070 SUPER and GeForce RTX 2080 SUPER, delivering best-in-class gaming performance and real-time ray tracing.
• Announced that new blockbuster titles including Call of Duty: Modern Warfare, Cyberpunk 2077, Watch Dogs: Legion, and Wolfenstein: Youngblood will feature ray tracing, propelling the momentum of RTX technology.
• Unveiled the new NVIDIA Studio platform for the world’s tens of millions of online and studio-based creatives, with the introduction of 27 new RTX Studio laptops powered by GeForce RTX™ and Quadro RTX™ GPUs.
• Announced the launch of 25 more gaming laptops by major makers fueled by NVIDIA Turing GPUs, bringing the total number of Turing laptops to more than 100.

Professional Visualization

• Announced that in its first full year, NVIDIA RTX ray tracing has emerged as the new industry standard in product design, architecture, effects and scientific visualization, with the support of more than 40 key applications, including eight introduced at SIGGRAPH.
• Rolled out a full range of Turing architecture-based Quadro GPUs for mobile workstations with global system providers.

Automotive

• Volvo Group announced that it is using the NVIDIA DRIVE end-to-end autonomous driving platform to train networks in the data center, test them in simulation and deploy them in self-driving vehicles, targeting freight transport, refuse and recycling collection, public transport, construction, mining, forestry and more.

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