NVIDIA announces preliminary financial results for the second quarter of fiscal 2023

Preliminary second-quarter revenue of $6.7 billion vs. forecasts of $8.1 billion. Shortfall vs. outlook driven primarily by weaker gaming revenue management to discuss financial results and outlook on Aug. 24 earnings call

NVIDIA (NASDAQ: NVDA) today announced selected preliminary financial results for the second quarter ended July 31, 2022.

Second-quarter revenue is expected to be approximately $6.7 billion, down 19% sequentially and up 3% year-over-year, primarily reflecting weaker-than-expected gaming revenue. Gaming revenue was $2.04 billion, down 44% sequentially and down 33% year-over-year. Data center revenue was $3.81 billion, up 1% sequentially and up 61% year-over-year.

The shortfall relative to May revenue forecasts of $8.1 billion was primarily attributed to lower sales of gaming products reflecting reduced channel partner sales likely due to macroeconomic headwinds. In addition to reducing sales, the company implemented pricing programs with channel partners to reflect difficult market conditions that are expected to persist in the third quarter.

Data center revenue, while a record, was slightly below the company’s expectations as it was hit by supply chain disruptions.

Second quarter results are expected to include approximately $1.32 billion of charges, primarily for inventory and related reserves, based on revised expectations of future demand.

“Our gaming product sales projections declined significantly as the quarter progressed,” said Jensen Huang, founder and CEO of NVIDIA. “As we expect macroeconomic conditions affecting sales to continue, we took steps with our Gaming partners to adjust channel pricing and inventory.

“NVIDIA has great products and a position that drives large and growing markets. As we navigate these challenges, we remain focused on the once-in-a-generation opportunity to reinvent computing for the age of AI,” he to say.

“The significant charges incurred during the quarter reflect previous long-term purchase commitments we made during a time of severe component shortages and our current expectation of macroeconomic uncertainty,” said Colette Kress, executive vice president and chief financial officer of NVIDIA.

“We believe our long-term gross margin profile is intact. We have restrained the growth of operating expenses, balancing investments for long-term growth and managing short-term profitability. We plan to continue share repurchases already that we anticipate strong cash generation and future growth,” he said.

2Q FY23 outlook1
Preliminary results Q2 FY23
Revenue $8.1 billion, plus or minus 2% from $6.7 billion
Gross margin – GAAP
Gross margin: Non-GAAP 65.1%, plus or minus 50 bp
67.1%, plus or minus 50 bp 43.7%, plus or minus 50 bp
46.1%, plus or minus 50 bp
Operating expenses – GAAP
Operating expenses: $2.46 billion non-GAAP
$1.75 billion $2.42 billion
1.75 billion dollars
Other GAAP and non-GAAP income and expenses $40 million expense $24 million and $16 million expense, respectively
GAAP and non-GAAP tax rates 12.5%, plus or minus 1%, excluding discrete items -35% GAAP (profit) and 2% non-GAAP, including discrete items

1 Announced in May 2022 in connection with the company’s press release announcing its fiscal first quarter 2023 financial results.

Revenue by market platform
($ in billions)
Q2 FY23
Preliminary results

Q/Q
I/I
Games $2.04 a 44% a download a 33%
Data center 3.81 +1% +61%
Professional view 0.50 download 20% download 4%
Automotive 0.22 + 59% + 45%
OEM and others 0.13 down 12% down 66%
Total $6.70 19% plus 3% reduction

Preliminary results for the second quarter ended July 31, 2022 are an estimate, based on information available to management as of the date of this release, and are subject to further change upon completion of standard closing procedures of the company’s quarter and year. . This update does not present all of the information necessary to understand NVIDIA’s financial position as of the date of this release, or the results of operations for the second quarter. As NVIDIA completes its quarter-end financial close process and finalizes its financial statements for the quarter, it will need to make significant judgments in several areas. NVIDIA may identify items that require adjustments to the preliminary financial information set forth above, and such changes may be material. NVIDIA does not intend to update this financial information prior to the release of its second quarter financial statement information, which is currently scheduled for August 24, 2022.

Conference call and webcast information

NVIDIA will host a conference call on Wednesday, August 24 at 2:00 PM PT (5:00 PM ET) to discuss its fiscal 2023 second quarter financial results.

The call will be webcast live (in listen-only mode). investor.nvidia.com. The company’s prepared remarks will be followed by a question and answer session, which will be limited to questions from financial analysts and institutional investors.

Prior to the call, NVIDIA will provide written comments on its second quarter results from its chief financial officer, Colette Kress. This material will be published in investor.nvidia.com immediately after the company’s results are publicly announced at approximately 1:20 PM PT.

The webcast will be recorded and may be replayed leading up to the company’s conference call to discuss fiscal 2023 third quarter financial results.

Non-GAAP measures

In addition to US GAAP financial measures, this press release includes preliminary estimates of non-GAAP measures of 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 costs, gains or losses on unrelated investments, interest expense related to the amortization of the debt discount, and associated tax impact of these items, if applicable.

An updated preliminary reconciliation of GAAP to non-GAAP gross margin, operating expenses, other income and expenses and tax rate is as follows:

Reconciliation of GAAP to non-GAAP financial measures
($ in millions)
Q2 FY23
Preliminary results

GAAP gross margin 43.7%
Stock-based compensation expense, acquisition-related costs and other costs 2.4
Non-GAAP gross margin 46.1%
GAAP operating expenses $2,416
Stock-based compensation expense and acquisition-related costs (667)
Non-GAAP operating expenses $1,749
Other GAAP expenses, net $24
Losses from unrelated investments and other costs (8)
Other non-GAAP expenses, net $16
GAAP tax rate (profit) (35%)
Tax Impact of Non-GAAP Adjustments 37
Non-GAAP tax rate of 2%

NVIDIA believes that the presentation of its non-GAAP financial measures enhances the user’s overall understanding of the company’s financial performance. The presentation of the Company’s non-GAAP financial measures should not be considered in isolation or as a substitute for the Company’s financial results prepared in accordance with GAAP, and the Company’s non-GAAP measures may differ of non-GAAP measures used by other companies.



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