Nvidia misses Q2 expectations for revenue and earnings per share

The disappointing results are in line with the hardware maker’s preliminary earnings report that was posted two weeks ago.
A blurred Nvidia GPU in green color, Nvidia logo and a financial report drawing fully visible at the center

The hardware maker Nvidia reported its Q2 2023 earnings and announced that the company missed expectations for overall revenue in this quarter. The drop in revenue is consistent with Nvidia’s preliminary earnings report, which the company shared two weeks earlier.

Related: Nvidia GeForce Now gets 1440p and 120 FPS support

The decline in expected revenue is massive; the chipmaker was expected to earn $8.1 billion in revenue but reported $6.7 billion for this quarter. Earnings per share were expected to be around $1.26, however, Nvidia reported $0.51, less than half of what was estimated.

Nvidia’s GAAP Q2 2023 summary can be seen below:

($ in millions, except earnings per share)Q2 FY23Year-over-year
Revenue$6,704Up 3%
Gross margin 43.5%Down 21.3 pts
Operating expenses$2,416Up 36%
Operating income$499Down 80%
Net income$656Down 72%
Diluted earnings per share$0.26Down 72%

While Nvidia’s year-over-year revenue saw a 3% increase its net income was down by 72%, and other performance indicators aren’t looking bright either, at least for the three-month period ended June 30. The company’s non-GAAP summary paints a more positive picture, of course.

Jensen Huang, founder and CEO of Nvidia believes the company will get through this tough period and come out stronger, despite the company’s “supply chain transitions in a challenging macro environment,”

Huang shared the following statement in the report:

“Accelerated computing and AI, the pioneering work of our company, are transforming industries. Automotive is becoming a tech industry and is on track to be our next billion-dollar business. Advances in AI are driving our Data Center business while accelerating breakthroughs in fields from drug discovery to climate science to robotics.

“I look forward to next month’s GTC conference, where we will share new advances in RTX, as well as breakthroughs in AI and the metaverse, the next evolution of the internet. Join us.”

Nvidia Gaming saw a sharp decline

A monitor, laptop, tablet and mobile phone all showing GeForce Now

Colette Kress, Nvidia’s Executive Vice President and CFO said the company’s gaming division expected a decline due to “softness in Europe related to the war in Ukraine and COVID lockdowns in China,” and added that the decline in gaming GPU revenue was much sharper than they anticipated.

“Macroeconomic headwinds across the world drove a sudden slowdown in consumer demand,” she said and added, “We implemented programs with our Gaming channel partners to adjust pricing in the channel and to price-position current high-end desktop GPUs as we prepare for a new architecture launch.”

Nvidia Gaming’s Q2 revenue was reported as $2.04 billion, down by 33% year-over-year and also down by 44% compared to the last quarter. The gaming division of Nvidia added RTX support to A Plague Tale: Requiem, Evil Dead: The Game and F1 22 during this period, bringing the total games that support RTX to over 280 titles.

The company also expanded the games library of its cloud gaming platform GeForce Now, the platform now supports more than 1,350 games.

Was Nvidia’s growth driven by cryptocurrency miners?

Thousands of crypto mining rigs in a room.

Colette Kress also commented on how the crypto market affected Nvidia’s performance, saying “We had expected cryptocurrency money to make a diminishing contribution to Gaming demand.” The experienced businessperson added, “We are unable to accurately quantify the extent to which reduced crypto money contributed to the decline.”

It’s well known that Nvidia GPUs are preferred by Ethereum crypto miners due to their efficiency in mining this specific coin, however, the chipmaker didn’t share any significant data in regards to how much market effect these miners have on Nvidia’s financial performance.

Kress further commented and shared the statement below:

“Volatility in the cryptocurrency market – such as declines in cryptocurrency prices or changes in the method of verifying transactions, including proof of work or proof of stake – has in the past impacted, and can in the future impact, demand for our products and our ability to accurately estimate it.”

Nvidia’s Q3 2023 outlook

The chip manufacturer shared its outlook for the upcoming quarter; Nvidia expects to earn about $5.9 billion in the third quarter of 2023, and the report displays that “GAAP and non-GAAP gross margins are expected to be 62.4% and 65.0%.”

The hardware giant expects its operating expenses to be around $2.59 billion GAAP, or $1.82 billion non-GAAP.

NEXT: Video games sales in Europe are down by 38% in July 2022Take-Two-Interactive-games-NBA-2K22-Michael-de-Santa-of-GTA-V-and-Harry-Potter-split-into-three-images

Leave a Reply

Your email address will not be published. Required fields are marked *