01—Abstract
Summary
Summary of the 10-K filed February 24, 2023. Cited figures are marked; the original filing is the authoritative source.
NVIDIA Corporation's 2023 10-K filing reveals a company at a pivotal moment, demonstrating resilience with flat year-over-year revenue of $26.97 billiona despite significant inventory challenges.
While the Graphics segment experienced a substantial downturn, primarily due to a strategic reduction in channel inventory and softening gaming demand, the Compute & Networking segment saw robust growth, driven by hyperscale customers and early cloud AI service adoption. A notable development was the $1.35 billionb acquisition termination cost related to the failed Arm acquisition, impacting overall profitability. The company is actively managing inventory levels and positioning itself for future growth, particularly in the burgeoning AI and data center markets, with a strong emphasis on its unified architecture and expanding software ecosystem.
Despite a significant decline in gross margin due to $2.17 billionc in inventory provisions, NVIDIA is investing heavily in R&D to maintain its technology leadership. The company faces ongoing risks related to supply chain dependencies, intense competition, and evolving global trade regulations, particularly concerning China. Nevertheless, NVIDIA's strategic focus on accelerated computing, AI, and its expanding platform strategy, coupled with substantial share repurchases and dividends, highlights its commitment to shareholder value and long-term innovation.
02—Key points
Key Highlights
- Revenue remained flat year-over-year at $26.97 billion, showing resilience despite a challenging economic environment and inventory corrections.
- The Compute & Networking segment exhibited strong growth (41% increase), driven by hyperscale customers and expanding AI cloud services, while the Graphics segment declined significantly (27% decrease) due to inventory reduction efforts and softer gaming demand.
- A substantial $1.35 billion acquisition termination cost was recognized due to the cessation of the Arm acquisition, impacting profitability.
- Gross margin decreased significantly due to $2.17 billion in inventory provisions, largely related to excess supply of Gaming and Data Center products.
- NVIDIA continues to invest heavily in Research and Development (R&D), with R&D expenses increasing by 39% to $7.34 billion, underscoring its commitment to innovation.
- The company returned $10.44 billion to shareholders through share repurchases ($10.04 billion) and dividends ($398 million) in fiscal year 2023.
- New US export restrictions impacting sales to China for certain high-end data center products present a significant challenge and require strategic navigation with alternative offerings.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, NVIDIA Corp kept $0.16.
- Revenue$26.97B100.0%
- Cost of revenue−$11.62B43.1%
- Gross profit$15.36B56.9%
- Operating costs−$11.13B41.3%
- Operating income$4.22B15.7%
- Interest, other & tax$144.0M0.5%
- Net income$4.37B16.2%
Where FY2023 revenue went
$26.97B- Cost of revenue: $11.62B, 43% of revenue
- R&D: $7.34B, 27% of revenue
- Operating income: $4.22B, 16% of revenue
- SG&A: $2.44B, 9.0% of revenue
- Other operating costs: $1.35B, 5.0% of revenue
Kept 16% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 24, 2023Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $26.97B$26.91B | +0.2% |
| Cost of Revenue | $11.62B$9.44B | +23.1% |
| Gross Profit | $15.36B$17.48B | −12.1% |
| R&D Expenses | $7.34B$5.27B | +39.3% |
| SG&A Expenses | $2.44B$2.17B | +12.7% |
| Operating Expenses | $11.13B$7.43B | +49.7% |
| Operating Income | $4.22B$10.04B | −57.9% |
| Interest Expense | $262.00M$236.00M | +11.0% |
| Net Income | $4.37B$9.75B | −55.2% |
| EPS (Basic) | $0.18$0.39 | −54.0% |
| EPS (Diluted) | $0.17$0.39 | −55.8% |
| Shares Outstanding (Basic) | 24.87B24.96B | −0.4% |
| Shares Outstanding (Diluted) | 25.07B25.35B | −1.1% |
05—Questions
Frequently Asked Questions
What was NVIDIA's financial performance like in fiscal year 2023?
NVIDIA reported revenue of $26.97 billion, which was flat compared to the previous fiscal year. While the Compute & Networking segment showed strong growth, the Graphics segment experienced a decline. Net income was $4.37 billion, a decrease of 55% from fiscal year 2022, largely impacted by a $1.35 billion acquisition termination cost and significant inventory provisions.
What are the main segments of NVIDIA's business, and how did they perform?
NVIDIA operates in two main segments: Compute & Networking and Graphics. The Compute & Networking segment, which includes Data Center products, saw revenue increase by 41% to $15.07 billion, driven by hyperscale customers and AI cloud services. The Graphics segment, encompassing gaming products, experienced a revenue decrease of 27% to $11.91 billion, attributed to efforts to reduce channel inventory and weaker gaming demand.
What were the key challenges and risks highlighted in the filing?
Key challenges include managing inventory levels across its product lines, particularly in the Gaming segment, navigating intense competition, and adapting to evolving global trade regulations, especially new U.S. export restrictions impacting sales to China. Supply chain dependencies and potential product defects also remain significant risks. The failed Arm acquisition also resulted in a substantial financial charge.
How is NVIDIA addressing its inventory situation?
NVIDIA has been strategically reducing its sell-in of GPU supply to channel partners to help lower inventory levels. This measure, along with pricing programs, aims to correct the excess inventory situation that arose due to rapid changes in economic conditions and reduced demand, particularly in the Gaming segment. The company reported significant inventory provisions ($2.17 billion) to account for this.
06—Continue