NVIDIA (Nasdaq: NVDA) Strong financial third quarter 2021 results after the market closed on Wednesday 18 November. The growth of the Graphics Processing Unit (GPU) specialist is driven by record revenue in its Gaming and Artificial Intelligence (AI) -Driven data center businesses.
The results for both the top and bottom lines flew through Wall Street consensus estimates, and the earnings and earnings per share (EPS) guidance for both quarters also fell short of analysts’ expectations.
But shares of Hot Tech Stock fell 2% in the trading session after Wednesday’s hour. We can attribute a slightly negative initial reaction to the market as NVIDI is not satisfied with the degree to which it has exceeded analysts’ estimates. The company’s stock is highly valued and is set to become the largest in 2020, so some investors (or at least short-term traders) are going to have unreliable expectations.
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Key numbers of NVIDIA
|
Metric |
Fiscal Q3 2021 |
Fiscal Q32020 |
Change |
|---|---|---|---|
|
Revenue |
73 4.73 billion |
1 3.01 billion |
57% |
|
GAAP operating operating income |
40 1.40 billion | 7 927 million | 51% |
|
GAAP net income |
34 1.34 billion | 99 899 million | 49% |
|
Adjusted net income |
83 1.83 billion | 10 1.10 billion | 66% |
|
GAAP earnings per share (EPS) |
12 2.12 | 45 1.45 | 46% |
|
Adjusted basics |
91 2.91 | 78 1.78 | 63% |
Data source: NVIDIA. GAAP = Generally accepted accounting principles.
Collet Cress said in a CFO comment that Mellox Technologies, which makes networking tools for data centers, contributed 13% to the company’s total revenue in April’s acquisition. So excluding Melanox’s contribution, revenue has increased by about 36% per year during the year.
My earnings were in search of adjusted EPS of Wall Street 2.56 of revenue on Wall Street revenue of 4.41 billion shown in the preview. And NVIDI provided guidance for adjusted EPS of Rs 2.55 crore on revenue of Rs 40.40 billion. Its results have therefore exceeded both its outlook and analysts’ expectations.
The GAAP gross margin was 62.6%, down slightly from 63 63 ..% in the previous quarter. Adjusted gross margin reached 65.5% as against 64.1% in the corresponding period of the previous year.
In additional terms, in the last quarter, NVIDII’s year-over-year revenue and adjusted EPS growth were 50% and 76%, respectively. Organic revenue growth, which excludes melanox contributions, was about 29%.
Platform operation
|
Platform |
Fiscal Q3 2021 Revenue |
Change YOY |
Replace QQ |
|---|---|---|---|
|
Gaming |
27 2.27 billion |
37% | 37% |
|
Information center |
90 1.90 billion |
162% | 8% |
|
Professional scene |
6 236 million |
(27%) |
16% |
|
Automotive |
Million 125 million |
(23%) | 13% |
|
OEM and IP |
Million 194 million |
36% | 33% |
|
Total |
73 4.73 billion |
57% | 22% |
Data source: NVIDIA. OEM and IP = original equipment manufacturer and intellectual property; The target market is not a platform. Quarter = quarter upon quarter.
The acquisition of Melanox accounted for about a third of the data center’s revenue, Cress said. In the CFO’s commentary, she discussed how the COVID-19 epidemic affected product demand in each of the four target platforms:
Our gaming and data center market platforms have benefited from strong demand as people continue to demand, do housework, learn and play. In business visualization, the strong demand for mobile workstations due to trends working from home was partly offset by the low demand for desktop desktop .p workstations. In automotive, consumer production volume has largely returned to pre-covid levels.
Crash added that the company has several supply chain issues ongoing as “capacity and availability of components are limited in strong global demand.”
What the CEO had to say
Here is part of what CEO Jensen Huang said in the earnings release:
NVIDI is firing on all cylinders, earning gaming, data center and overall record revenue. The new NVIDIA GeForce RTX GPU provides our largest pay generation leap and the demand is overwhelming. NVIDIA has made a splash by inventing a new standard in RTX gaming.
[Outline of the company’s recent AI achievements.] We rank NVIDIA for the age of AI, while computing will expand from the cloud to trillions of devices.
Pending arm editing
NVIDI expects to close its 40 40 billion acquisition of its leading central processing unit (CPU) chip designer Arm in the first quarter of 2022. The good news for investors is that this transaction is likely to receive the company’s adjusted gross margin immediately.
Fiscal Q4 guidance exceeded expectations
For fiscal year Q21 2021, management expects revenue of 80 4.80 billion, representing 54 %% year-over-year growth. It also guides the adjusted EPS of 2.79, indirectly, by giving a set of inputs, representing an increase of 48%.
At the time of publication, Wall Street was modeling for fiscal Q4 adjusted EPS of fiscal 2.54 on fiscal.4242 billion revenue. So NVIDIA’s estimate easily surpassed both estimates.
A fantastic quarter
NVIDIA had a fantastic quarter, and its future continues to look bright. Long-term investors should not pay attention to the slightly negative initial reaction of the market during the trading session after Wednesday’s hours. This action was probably performed by short-term momentum traders.
