Tech

Nvidia beats on both earnings and revenue, sales up 57%

Key Points
  • Nvidia reported earnings for its third fiscal quarter of 2021 on Wednesday.
  • Nvidia beat analyst expectations on both earnings and revenue in its fiscal fourth quarter but shares barely moved in extended trading.
  • Nvidia said it set company records for revenue and quarterly profit and that revenue was up 57% from the same period last year,
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We were bullish ahead of the report, but Nvidia did better-than-expected: Analyst

Nvidia beat analyst expectations on both earnings and revenue in its fiscal fourth quarter, but the stock dropped more than 3% in extended trading after the company said that revenue from its data center segment would decline sequentially in the current quarter.

Here's how Nvidia did in the quarter ending in October:

  • Earnings: $2.91 per share, adjusted, vs. $2.57 per share as expected by analysts, according to Refinitiv. 
  • Revenue: $4.73 billion, vs. $4.41 billion as expected by analysts, according to Refinitiv. 

Analysts had been expecting a big quarter from the Santa Clara chipmaker driven by sales of its graphics processing unit chips, which are increasingly important for both games and artificial intelligence developers who need processing power.

Nvidia said it set company records for revenue, up 57% from the same period last year, and quarterly profit.

Nvidia's big quarter was driven by its compute and networking segment, which was up 146% from a year ago to $1.94 billion. It was also boosted by the company's graphics segment, which was up 25% from last year to $2.79 billion. In addition to reporting revenue in terms of those two segments, Nvidia also discloses revenue by which market the products are intended for.

Nvidia CEO Jensen Huang said in August that the company is expecting a strong half of the year in its gaming division. During the quarter, Nvidia revealed its new line of graphics cards based on a new technology it calls Ampere, and interest was strong. One of the new models, the GeForce RTX 3080, went on sale in September and immediately sold out.

Revenue in the gaming market was up 37% from last year to $2.27 billion, which the company called a record and attributed to sales of graphics cards to computer and console makers, and said that desktop sales benefitted from the launch of its new RTX graphics cards.

On Wednesday, the company said that both its gaming and data center divisions have also been boosted during the Covid-19 pandemic as customers need computers to work and play from home.

Last quarter, Nvidia's data center line item surpassed gaming revenue for the first time. This quarter, Nvidia reported $1.9 billion in sales in the data center market, behind the gaming division, although it increased by 162% from the same period last year, driven by sales of Ampere graphics chips. Nvidia also said on Wednesday that its purchase of Mellanox, which closed earlier this year, contributed 13% to total company revenue and about a third of data center revenue.

Nvidia said in a call with analysts that it expected its data center revenue to decline in the current quarter, partially driven by a Chinese customer not purchasing Mellanox networking products.

In September, Nvidia said it planned to buy ARM from SoftBank for $40 billion, in a move seen as having significant implications for the semiconductor industry. ARM develops technology widely used across the industry to develop low-power chips for mobile devices and supplies technology to most of Nvidia's competitors. Nvidia said on Wednesday that it expected to close the ARM acquisition in the first quarter of 2022.

Nvidia said that it expected $4.8 billion in revenue in its fiscal fourth quarter, in line with analyst expectations per Refinitiv of $4.42 billion.