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NVIDIA’s revenue statement was stellar – but still insufficient for all investors

NVIDIA 09.30 NASDAQ: NVDA reported strong fiscal results for the third quarter of 2021 after the market closed on Wednesday, November 18. The growth of the graphics processing specialist (GPU) is due to record revenues in the business of data centers managed by games and artificial intelligence (AI).

Both the top and bottom line results differ from Wall Street consensus estimates, and fourth-quarter earnings and adjusted earnings per share (EPS) guidelines are also higher than analysts expect.

But shares of hot technology stocks fell 2% in the trading session after business hours on Wednesday. We can probably attribute the slightly negative initial reaction in the market, as some investors are dissatisfied with the extent to which NVIDIA exceeds analysts̵

7; estimates. The company’s shares are highly valued and increased in 2020, so some investors (or at least short-term traders) will have insatiable expectations.

Silhouette of a man's head with digital images.

Image source: Getty Images.

NVIDIA key numbers


Fiscal Q3 2021

Fiscal Q3 2020



$ 4.73 billion

$ 3.01 billion


GAAP operating income

$ 1.40 billion $ 927 million 51%

GAAP net income

$ 1.34 billion $ 899 million 49%

Adjusted net income

$ 1.83 billion $ 1.10 billion 66%

GAAP earnings per share (EPS)

$ 2.12 $ 1.45 46%

EPS corrected

$ 2.91 $ 1.78 63%

Data source: NVIDIA. GAAP = generally accepted accounting principles.

Colette Cress said in a comment to the CFO that the company’s acquisition in April of Mellanox Technologies, which manufactures network equipment for data centers, contributed 13% of the company’s total revenue. Excluding Mellanox’s contribution, revenue grew by about 36% on an annual basis.

Wall Street was looking for a adjusted EPS of $ 2.56 with revenue of $ 4.41 billion, as stated in my revenue review. And NVIDIA is targeting an adjusted EPS of $ 2.55 with revenue of $ 4.40 billion. Thus, its results exceeded both the prospects and expectations of analysts.

Gross GAAP margin was 62.6%, down slightly from 63.6% in the previous quarter. The adjusted gross margin reached 65.5%, compared to 64.1% a year ago.

For further context, NVIDIA’s annual revenue and adjusted EPS growth were 50% and 76%, respectively, in the last quarter. The growth of organic revenues, which excludes the contribution from Mellanox, is about 29%.

Platform performance


Fiscal Q3 2021 Revenues

Change YOY

Change the QOQ


$ 2.27 billion

37% 37%

Data center

$ 1.90 billion

162% 8%

Professional visualization

$ 236 million




$ 125 million

(23%) 13%

OEM and IP

$ 194 million

36% 33%


$ 4.73 billion

57% 22%

Data source: NVIDIA. OEM and IP = manufacturer of original equipment and intellectual property; is not a target market platform. QOQ = quarter for quarter.

The acquisition of Mellanox contributed approximately one-third of the data center’s revenue, Kress said. In the CFO’s comment, she discussed how the COVID-19 pandemic affects product demand on each of the four target platforms:

Our gaming platforms and data centers have benefited from greater demand as people continue to work, study and play from home. In professional visualization, the increased demand for mobile workstations due to homework trends was partially offset by lower demand for desktop workstations. In the automotive industry, customer production volumes have largely returned to pre-COVID levels.

Kress added that the company continues to have some problems in the supply chain, as “greater global demand has limited the availability of capacity and components.”

What the CEO had to say

Here is part of what CEO Jenson Huang had to say in the revenue statement:

NVIDIA fires at all cylinders, achieving record revenue in gaming, the data center and overall. The new NVIDIA GeForce RTX graphics processor provides our biggest leap in generations and demand is huge. NVIDIA RTX has made beam tracking the new standard in gaming.

[Outline of the company’s recent AI achievements.] We position NVIDIA for the age of AI, when computing will expand from the cloud to trillions of devices.

Awaiting acquisition by hand

NVIDIA expects the acquisition of $ 40 billion by leading chip designer Arm for CPU to be completed in the first quarter of the 2022 calendar. The good news for investors is that this transaction is expected to be immediately in line with the adjusted gross margin of the company and adjusted EPS.

The guidelines for fiscal Q4 exceeded expectations

For fiscal Q4 2021, management expects revenue of $ 4.80 billion, an increase of 54% on an annual basis. He also targeted (albeit indirectly, providing a bunch of input) for an adjusted EPS of $ 2.79, an increase of 48%.

Entering the issue, Wall Street modeled for a fiscally adjusted Q4 EPS of $ 2.54 with revenue of $ 4.42 billion. Thus, NVIDIA’s prospects easily surpassed both estimates.

Fantastic quarter

NVIDIA had a fantastic quarter and its future still looks bright. Long-term investors should not pay attention to the slightly negative initial reaction of the market during the trading session after working hours on Wednesday. This action was probably largely driven by short-term inertia traders.

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