Nvidia Corporation (NVDA) reported a 49% dip in earnings for the fourth quarter due to the combination of post-crypto excess channel inventory and recent deteriorating end-market conditions. The bottom line exceeded analysts’ expectations while the top line missed consensus estimates.

Net income plunged 49% to $567 million and earnings dipped 48% to $0.92 per share. Adjusted earnings plummeted 53% to $0.80 per share.

Revenue plunged by 24% to $2.21 billion. The results were hurt by a decline in Gaming. Gaming revenues dropped 45% on weakness in gaming GPUs and a decline in shipments of SOC modules for gaming platforms.

GPU business revenue declined by 20% primarily reflecting declines in gaming GPUs. Tegra Processor business revenue plunged 50% due to a fall in shipments of SOC modules for gaming platforms. OEM and IP revenue fell by 36% due to the absence of crypto-currency mining GPU sales.

However, Professional Visualization revenue increased by 15% driven by the strength across both desktop and mobile workstation products. Datacenter revenue rose by 12% on growth in sales of Volta architecture products, including Nvidia Tesla V100 and DGX systems. Automotive revenue grew by 23% on growth in infotainment modules, production DRIVE platforms, and development agreements with automotive companies.

An infographic on Nvidia's fourth quarter earnings results
Nvidia Q4 2019 Earnings Infographic

Looking ahead into the first quarter of 2020, the company expects revenue to be $2.20 billion, plus or minus 2%, and gross margin to be 58.8%, plus or minus 50 basis points. Adjusted gross margin was predicted to be 59%, plus or minus 50 basis points. For fiscal 2020, revenue is expected to be flat to down slightly.

For the first quarter, operating expenses are anticipated to be about $930 million and adjusted operating expenses are predicted to be $755 million. The sequential change in operating expenses reflects an increase in stock-based compensation. Capital expenditures are expected to be about $150 million to $170 million.

In fiscal 2019, the company returned $1.95 billion to shareholders through a combination of $1.58 billion in share repurchases and $371 million in quarterly cash dividends. After returning $700 million through share repurchases during the fourth quarter, the company plans to return the balance $2.30 billion by the end of fiscal 2020.

Nvidia will pay its next quarterly cash dividend of $0.16 per share on March 22, 2019, to all shareholders of record on March 1, 2019.

Shares of Nvidia ended Thursday’s regular session up 1.08% at $154.53 on the Nasdaq. Following the earnings release, the stock inched up 7.60% in the after-market session.

 

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