10-QPeriod: Q1 FY2024

NVIDIA CORP Quarterly Report for Q1 Ended Apr 30, 2023

Filed May 26, 2023For Securities:NVDA

Summary

NVIDIA Corporation reported its first-quarter fiscal year 2024 results, showcasing resilience and strategic shifts. While overall revenue declined year-over-year by 13% to $7.19 billion, this was driven by a significant 41% drop in the Graphics segment, largely due to normalized channel inventory and macroeconomic slowdown impacting gaming. However, the crucial Compute & Networking segment demonstrated strong growth, with a 21% year-over-year increase in revenue to $4.46 billion, fueled by burgeoning demand for AI and large language models. This segment's performance was bolstered by sales to large consumer internet companies and cloud service providers, highlighting NVIDIA's pivotal role in the AI infrastructure build-out. The company also saw a notable sequential improvement in revenue, up 19% from the previous quarter, indicating a recovery and increasing demand, particularly in Data Center applications. Profitability remained strong, with net income rising 26% year-over-year to $2.04 billion and diluted EPS increasing by 28% to $0.82. NVIDIA continues to manage its supply chain actively, preparing for new product architectures and navigating global trade complexities, including recent U.S. export controls impacting sales to China.

Financial Highlights

54 data points
Beta

Revenue

$7.19B

64.6% Gross Margin

Net Income

$2.04B

28.4% Net Margin

EPS (Diluted)

$0.08

Total Assets

$44.46B

Cash & Equivalents

$5.08B

Free Cash Flow

$2.91B

Financial Statements
Beta
Revenue$7.19B
Cost of Revenue$2.54B
Gross Profit$4.65B
R&D Expenses$1.88B
SG&A Expenses$633.00M
Operating Expenses$2.51B
Operating Income$2.14B
Interest Expense$66.00M
Net Income$2.04B
EPS (Basic)$0.08
EPS (Diluted)$0.08
Shares Outstanding (Basic)24.70B
Shares Outstanding (Diluted)24.90B

Key Highlights

  • 1Compute & Networking segment revenue grew 21% year-over-year to $4.46 billion, driven by strong demand for AI and large language models.
  • 2Overall revenue declined 13% year-over-year to $7.19 billion, primarily due to a 41% decrease in the Graphics segment.
  • 3Net income increased 26% year-over-year to $2.04 billion, with diluted EPS up 28% to $0.82.
  • 4The company saw a sequential revenue increase of 19%, signaling a positive trend and demand recovery.
  • 5Data Center revenue, a key driver for AI, grew 14% year-over-year, supported by Hopper and Ampere architectures.
  • 6NVIDIA is actively managing supply chain complexities, including transitioning to new product architectures and navigating U.S. export controls impacting sales to China.
  • 7Total cash, cash equivalents, and marketable securities stood at $15.32 billion, providing strong liquidity.

Frequently Asked Questions

The primary driver of NVIDIA's revenue growth in this quarter is the Compute & Networking segment, which saw a 21% year-over-year increase. This growth is largely attributed to the surging demand for its GPUs and platforms for artificial intelligence (AI) and large language models (LLMs), particularly from large consumer internet companies and cloud service providers.

Overall revenue declined by 13% year-over-year primarily due to a significant 41% decrease in the Graphics segment. This was driven by factors such as normalizing channel inventory levels, a macroeconomic slowdown affecting the gaming market, and a strategic reduction in sell-in to partners in the Professional Visualization segment to manage inventory.

NVIDIA is actively managing the impact of U.S. export controls. The company has transitioned some operations out of China and Hong Kong and has offered alternative products, such as the A800 and H800 offerings, to customers in China that are not subject to the same license requirements. However, the company acknowledges the complexity and potential harm to its competitive position and market access in China due to these ongoing regulatory changes.

NVIDIA maintains a strong financial position. As of April 30, 2023, the company held $15.32 billion in cash, cash equivalents, and marketable securities. Net cash provided by operating activities was $2.91 billion for the quarter, and the company believes it has sufficient liquidity to meet its operating requirements for the foreseeable future.