Preliminary second quarter revenue of $6.70 billion vs. outlook of $8.10 billion

The main reason for the lower than expected revenue is the decrease of game revenue

Management to Discuss Financial Report and Outlook in Earnings Conference Call on August 24 Pacific Time
 
SANTA CLARA, CA – August 8, 2022 Pacific Time – NVIDIA Corporation (NASDAQ: NVDA ) announced portions of its preliminary financial results for the second quarter ended July 31, 2022.
 
Second-quarter revenue is expected to be approximately $6.70 billion, down 19% quarter-over-quarter and up 3% year-over-year, primarily reflecting lower-than-expected gaming revenue. Game revenue was $2.04 billion, down 44% from the previous quarter and down 33% from the same period last year. Data center revenue was $3.81 billion, up 1% sequentially and 61% year-over-year.
 
The revenue miss of May’s $8.10 billion revenue forecast was primarily due to lower shipments of gaming products, reflecting possible reductions in channel partner sales due to macroeconomic headwinds. In addition to reducing shipments, the company has implemented pricing plans with channel partners to reflect challenging market conditions that are expected to continue into the third quarter.
 
Data center revenue, while record, fell slightly below the company’s expectations due to disruptions in the supply chain.
 
Based on revised future demand expectations, second-quarter results are expected to include charges of approximately $1.32 billion, primarily for inventory and related reserves.
 
Jensen Huang, founder and CEO of NVIDIA, said: “As the quarter progressed, we significantly lowered our sales forecast for our gaming products. channel prices and inventory.”
 
Jensen Huang said: “NVIDIA has excellent products that continue to drive a large and growing market. As we address these challenges, we remain focused on the once-in-a-lifetime opportunity to reshape computing for the AI ​​era.”
 
“Significant charges were incurred in the quarter, reflecting our previous long-term procurement commitments during a period of severe component shortages and current expectations of continued macroeconomic uncertainty,” said Colette Kress, NVIDIA executive vice president and chief financial officer.
 
Colette Kress said: “We believe the long-term gross profit position is intact. We have moderated the pace of growth in operating expenses, balancing investments in long-term growth while managing near-term margins. We forecast strong cash flow and future growth , and therefore plans to continue with share repurchases.”
 


Announced in May 2022 in connection with the company’s press release for the first quarter of fiscal 2023 financial results.
 


Preliminary results for the second quarter ended July 31, 2022 are based on information available to management as of the date of this press release and are subject to further changes upon completion of the Company’s standard quarterly and year-end closing procedures. This update does not provide all the information necessary to understand NVIDIA’s financial condition or its second quarter operating results as of the date of this report. After completing the quarter-end financial close process and finalizing the current quarter’s financial statements, NVIDIA will need to exercise significant judgment in a number of areas. It is possible that NVIDIA may identify items that require adjustments to the preliminary financial information described above, and such changes could have decisive effects. NVIDIA does not intend to update these financial information prior to the release of its final second quarter financial statement information, currently scheduled for August 24, 2022 PT.
 
Conference Call and Webcast Information


NVIDIA will hold a conference call at 2:00 pm Pacific time on Wednesday, August 24th (5:00 am Beijing time on August 25th) to discuss the company’s fiscal second quarter 2023 financial report.
 
The conference call will be webcast live (in audio form) at investor.nvidia.com. After the company’s presentation, there will be a question-and-answer session, limited to financial analysts and institutional investors.
 
Ahead of the call, NVIDIA will provide written comments on second-quarter results from its CFO, Colette Kress. These materials will be released on investor.nvidia.com at approximately 1:20 p.m. PT following the company’s public earnings announcement.
 
At the same time, the webcast will be recorded and can be replayed at any time before the financial report conference call for the third quarter of fiscal year 2023.
 
Non-GAAP Measures

In addition to U.S. GAAP financial measures, this press release includes preliminary estimates of non-GAAP measures for certain components of financial performance. These preliminary estimates of non-GAAP measures include non-GAAP gross margin, operating expenses, other income and expenses, and income tax expense.
 
These non-GAAP financial measures exclude stock-based compensation expense, acquisition-related and other charges, gains or losses on unaffiliated investments, interest expense related to the amortization of debt discounts and related taxes applicable to these items.
 
A preliminary updated reconciliation of GAAP and non-GAAP gross margin, operating expenses, other income and expenses, and tax rates is as follows:
 
 

NVIDIA believes that these non-GAAP financial measures enhance users’ overall understanding of the company’s financial performance. The Company’s presentation of non-GAAP financial measures is not intended to isolate or replace the Company’s GAAP financial results. NVIDIA’s non-GAAP financial measures may differ from non-GAAP financial measures used by other companies.

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