Summary
NVIDIA Corporation's 10-Q filing for the period ending October 30, 2022, reveals a challenging quarter marked by a significant decline in revenue and net income compared to the prior year. Revenue dropped 17% year-over-year to $5.93 billion, while net income fell a steep 72% to $680 million. This downturn was primarily driven by a substantial decrease in the Graphics segment, down 48% year-over-year, attributed to a strategic reduction in product shipments to align channel inventory with demand amidst macroeconomic headwinds and COVID-related disruptions in China. The significant increase in inventory provisions, totaling $702 million in the quarter, also heavily impacted gross margins, which fell to 53.6% from 65.2% a year ago. Despite these headwinds, the Compute & Networking segment showed resilience, growing revenue by 27% year-over-year, driven by strong demand from cloud service providers and other vertical industries, and the initial shipments of the new H100 data center GPU. However, this growth was somewhat tempered by U.S. government export restrictions impacting sales to China, though NVIDIA has been working to mitigate this with alternative product offerings. The company continues to return capital to shareholders through share repurchases and dividends, with $8.28 billion remaining under its share repurchase authorization. Investors should closely monitor inventory levels, the impact of geopolitical and macroeconomic factors, and the performance of the Compute & Networking segment as NVIDIA navigates these complex market conditions.
Financial Highlights
55 data points| Revenue | $5.93B |
| Cost of Revenue | $2.75B |
| Gross Profit | $3.18B |
| R&D Expenses | $1.95B |
| SG&A Expenses | $631.00M |
| Operating Expenses | $2.58B |
| Operating Income | $601.00M |
| Interest Expense | $65.00M |
| Net Income | $680.00M |
| EPS (Basic) | $0.03 |
| EPS (Diluted) | $0.03 |
| Shares Outstanding (Basic) | 24.83B |
| Shares Outstanding (Diluted) | 24.99B |
Key Highlights
- 1Revenue declined 17% year-over-year to $5.93 billion, primarily due to a sharp drop in the Graphics segment.
- 2Net income decreased significantly by 72% year-over-year to $680 million.
- 3Compute & Networking revenue grew 27% year-over-year, driven by Data Center demand, while Graphics revenue fell 48% year-over-year.
- 4Gross margin contracted to 53.6% from 65.2% a year ago, heavily impacted by $702 million in inventory provisions.
- 5The company began shipping its new H100 data center GPU, indicating progress in high-performance computing.
- 6U.S. export restrictions on certain AI chips to China impacted revenue, though mitigation efforts are underway.
- 7NVIDIA continued to return capital to shareholders, repurchasing $3.65 billion in shares and paying $100 million in dividends during the quarter.