Nvidia revenue guidance misses expectations

Key Points
  • Nvidia beat on the top and bottom lines, but quarterly revenue guidance was below expectations.
  • The company's revenue has now declined four quarters in a row.
Jen-Hsun Huang, chief executive officer of Nvidia Corp.
Patrick T. Fallon | Bloomberg | Getty Images

Nvidia shares seesawed in extended trading on Thursday after the company issued better-than-expected fiscal third-quarter results and slightly soft quarterly guidance.

Here's how the company did:

  • Earnings: Excluding certain items, $1.78 per share, vs. $1.57 per share as expected by analysts, according to Refinitiv.
  • Revenue: $3.01 billion, vs. $2.91 billion as expected by analysts, according to Refinitiv.

Nvidia's revenue fell 5% from a year ago in the quarter, which ended on October 27, according to a statement. The company sold inventory that it had previously written off in the quarter, but revenue has now declined four quarters in a row on an annualized basis.

Nvidia's largest business segment, Gaming, shrunk 6% year-over-year at $1.66 billion in quarterly revenue, which is above the $1.54 billion consensus among analysts polled by FactSet.

The company Data Center business delivered $726 million in revenue, less than the $754.2 million FactSet consensus estimate. The Professional Visualization segment came up with revenue of $324 million, higher than the $315.4 million estimate.

In the fiscal third quarter Nvidia announced new GeForce Super graphics processing units for gaming and a new kind of Microsoft Azure Data Box Edge hardware product containing its T4 GPUs.

In terms of guidance, Nvidia said it expects $2.95 billion in revenue, plus or minus 2%, for the fiscal fourth quarter, which implies a nearly 34% increase. But analysts polled by Refinitiv had expected $3.06 billion in fiscal fourth-quarter revenue.

The company believes the Data Center business will post a sequential improvement in the fiscal fourth quarter. Nvidia's forecast doesn't include the impact from Mellanox, a $6.9 billion acquisition that has not yet closed.

Nvidia is calling for $805 million in operating expenses in the fiscal fourth quarter, excluding certain items, more than the FactSet estimate of $768 million.

In the past year Nvidia has dealt with numerous issues, including the disappearance in revenue from selling cards for mining cryptocurrencies and a pause in spending from companies that operate hefty data centers, and they've hurt the company's track record of surpassing expectations, Deutsche Bank analysts led by Ross Seymore wrote in a note distributed to clients on Sunday.

The analysts, who have a hold rating on Nvidia, said it was likely the company would achieve "positive follow-through" in its Data Center segment in the fiscal fourth quarter, although the Gaming business would have a tougher sequential revenue comparison, partly because of negative seasonality effects from Nintendo Switch console sales.

Nvidia stock has risen 57% since the start of 2019.

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