Nvidia Beat Earnings: Shares Plummet

Nvidia Corp. (NASDAQ: NVDA) reported its second quarter earnings for the 2018 fiscal year, and surpassed estimates, but shares plummeted during after hours.

Nvidia reported an increase EPS of $1.01  compared to a EPS of $0.70 by Thomson Reuters. Revenue was reported at $2.23 billion compared to $1.96 billion by Thomson Reuters.

Nvidia posted a record revenue and is now up 56 year over year from last year’s second quarter of $1.43 billion, and up 15 percent from last quarter of $1.94 billion. EPS is up 91 percent year over year of $0.53, and up 19 percent from the previous quarter of $0.85.

The company reported its first quarter earnings back in May. Nvidia beat estimates that quarter as well, which sent shares skyrocketing. Nvidia still beat records in the second quarter, but sent shares plummeting down over 5 percent during after hours.

Nvidia's gaming revenue was the biggest contributor to the company's earnings this quarter and was up 52 percent year over year, and it beat analysts' estimates, according to StreetAccount.

"Adoption of NVIDIA GPU computing is accelerating, driving growth across our businesses," said Jensen Huang, founder and chief executive officer of NVIDIA. "Datacenter revenue increased more than two and a half times. A growing number of car and robot-taxi companies are choosing our DRIVE PX self-driving computing platform. And in Gaming, increasingly the world's most popular form of entertainment, we power the fastest growing platforms – GeForce and Nintendo Switch.

"Our strategy is to stay alert to this fast-changing market, knowing that GPUs are highly efficient at running the algorithms used to mine cryptocurrencies," Nvidia executive vice president and chief financial officer Colette Kress told analysts during the earnings call.

Nvidia highlighted in the earnings that Volta Tesla V100 GPUs accelerators have begun shipping.

Volta is especially designed to accommodate AI workloads, not unlike Alphabet's second-generation tensor processing unit (TPU), which will become available for anyone to use exclusively on Google's public cloud, according to CNBC.

"Nvidia GPU is basically a TPU that does a lot more," Huang said.

Other highlights of the Datacenter during the quarter include Nvidia announcing the new lineup of NVIDIA DGX AI supercomputers and NVIDIA GPU platform, which helps give developers a comprehensive software suite AI development.

During the first half of 2018, Nvidia paid $758 million in share repurchases and $166 million in cash dividends. For the rest of the year, Nvidia plans to return $1.25 billion to shareholders. Nvidia will pay its next quarterly cash dividends of $0.14 per share on September 18, 2017 to all shareholder of record on August, 24, 2017, according to its earnings report.

For the rest of the fiscal year, here’s Nvidia’s outlook:

  • Revenue is expected to be $2.35 billion, plus or minus 2 percent
  • GAAP and non-GAAP gross margins are expected to be 58.6 percent and 58.8 percent, respectively, plus or minus 50 basis points
  • GAAP other income and expense is expected to be expense of approximately $2 million, Non-GAAP other income and expense is expected to be nominal.

Nvidia shares plummeted down to $150.20 during after hours after earnings were reported. Shares opened back up at 157.03 on Friday.

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