How Did Nvidia Fare In Q1, And What Can We Expect From Fiscal 2020?

by Trefis Team
+7.88%
Upside
167
Market
180
Trefis
NVDA
nVIDIA
Rate   |   votes   |   Share

Nvidia (NASDAQ:NVDA) recently reported its Q1 fiscal 2020 results, which were in line with our estimates. This note details the company’s Q1 performance, and Trefis’ forecasts for the full fiscal 2020. You can view our interactive dashboard analysis ~ How Did Nvidia Fare In Q1, And What Can We Expect From Fiscal 2020? In addition, you can see more of our data for Information Technology companies here. 

How did Nvidia’s top line fare in Q1?

  • Nvidia’s total revenues declined 31% to $2.22 billion in Q1 fiscal 2020.
  • This can primarily be attributed to a sharp decline in gaming, as well as absence of revenues from crypto mining processors.
  • The company’s revenue has largely declined in the recent quarters from $3.21 billion in Q1 fiscal 2019 to $2.22 billion in Q1 fiscal 2020.

What impacted the Q1 earnings?

  • Earnings Per Share declined 57% from $2.05 in Q1 fiscal 2019 to $0.88 per share in Q1 fiscal 2020.
  • The plunge in adjusted earnings can be attributed to lower revenues and lower margins, which was down partly due to lower gaming margins.

How does the revenue growth in the recent quarters compare to its peers?

  • Nvidia’s average revenue decline of 4.1% from $2.91 billion in Q4 fiscal 2018 to $2.22 billion in Q1 fiscal 2020 has been higher than that of AMD and Intel.
  • AMD’s revenues have declined at an average of 0.2% from $1.34 billion in Q4 2017 to $1.27 billion in Q1 2019.
  • Intel’s revenues have declined at an average of 0.8% from $17.05 billion in Q4 2017 to $16.06 billion in Q1 2019.

What are Nvidia’s key sources of revenue?

  • Nvidia generates its revenues from graphic processing units (GPUs), and Tegra processors.
  • GPUs refer to revenue from Nvidia’s graphic processing units used in PCs and data centers.
  • Tegra processor segment includes products based on Tegra SOC (system-on-chip) and modem processor technologies, which includes Tegra for automotive computers, including infotainment and navigation systems; and gaming devices.

What to expect from GPUs segment in fiscal 2020?

  • Nvidia’s GPU revenues grew 25% to $10.18 billion in fiscal 2019. However, revenues will likely decline 5% to $9.64 billion in fiscal 2020, partly due to lower gaming PCs and notebook sales.
  • Also, a decline in demand for GPUs used for crypto mining will impact the sales. Crypto currencies have seen a massive decline in the recent past, and the demand for graphics cards has faded, which were earlier sought for crypto mining.
  • The slowdown in the Chinese economy is impacting the sales of its newly launched Turing products. Trade tensions between the U.S. and China could further add to the woes. Note that China accounted for roughly 25% of the company’s sales in the past quarter.

What to expect from Tegra processors segment in fiscal 2020?

  • Tegra processors revenue declined 2% to $1.54 billion in the last fiscal. However, the decline could be in low double-digits to $1.36 billion in fiscal 2020, due to lower shipments for gaming consoles.
  • The decline in sales can largely be attributed to a lower shipments of SOC (system-on-chip) modules for gaming consoles.
  • However, the company’s automotive business is doing well with 14% y-o-y revenue gains in the past quarter, led by increased adoption of the company’s next generation artificial intelligence cockpit solutions.
  • These trends will likely continue in the near term.

How much can Nvidia’s full fiscal earnings grow?

  • Nvidia’s full fiscal 2020 earnings will likely be $5.67 per share on an adjusted basis, reflecting a 15% decline over the prior fiscal.
  • The earnings decline can be attributed to lower revenues, and an expected decline in margins, due to lower gaming margins.
  • Average consensus earnings for fiscal 2020 ~ $5.30.

 

What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs

For CFOs and Finance Teams | Product, R&D, and Marketing Teams

All Trefis Data

Like our charts? Explore example interactive dashboards and create your own.

Rate   |   votes   |   Share

Comments

Name (Required)
Email (Required, but never displayed)
Be the first to comment!