NVIDIA Announces Financial Results for Third Quarter Fiscal 2023 (2024)

  • Data Center revenue of $3.83 billion, up 31% from a year ago
  • Quarterly return to shareholders of $3.75 billion

NVIDIA (NASDAQ: NVDA) today reported revenue for the third quarter ended October 30, 2022, of $5.93 billion, down 17% from a year ago and down 12% from the previous quarter.

GAAP earnings per diluted share for the quarter were $0.27, down 72% from a year ago and up 4% from the previous quarter. Non-GAAP earnings per diluted share were $0.58, down 50% from a year ago and up 14% from the previous quarter.

“We are quickly adapting to the macro environment, correcting inventory levels and paving the way for new products,” said Jensen Huang, founder and CEO of NVIDIA.

“The ramp of our new platforms ― Ada Lovelace RTX graphics, Hopper AI computing, BlueField and Quantum networking, Orin for autonomous vehicles and robotics, and Omniverse ― is off to a great start and forms the foundation of our next phase of growth.

“NVIDIA’s pioneering work in accelerated computing is more vital than ever. Limited by physics, general purpose computing has slowed to a crawl, just as AI demands more computing. Accelerated computing lets companies achieve orders-of-magnitude increases in productivity while saving money and the environment,” he said.

During the third quarter of fiscal 2023, NVIDIA returned to shareholders $3.75 billion in share repurchases and cash dividends, bringing the return in the first three quarters to $9.29 billion. As of October 30, 2022, the company had $8.28 billion remaining under its share repurchase authorization through December 2023.

NVIDIA will pay its next quarterly cash dividend of $0.04 per share on December 22, 2022, to all shareholders of record on December 1, 2022.

Q3 Fiscal 2023 Summary

GAAP
($ in millions, except earnings per share)Q3 FY23Q2 FY23Q3 FY22Q/QY/Y
Revenue$5,931$6,704$7,103Down 12%Down 17%
Gross margin53.6%43.5%65.2%Up 10.1 ptsDown 11.6 pts
Operating expenses$2,576$2,416$1,960Up 7%Up 31%
Operating income$601$499$2,671Up 20%Down 77%
Net income$680$656$2,464Up 4%Down 72%
Diluted earnings per share$0.27$0.26$0.97Up 4%Down 72%
Non-GAAP
($ in millions, except earnings per share)Q3 FY23Q2 FY23Q3 FY22Q/QY/Y
Revenue$5,931$6,704$7,103Down 12%Down 17%
Gross margin56.1%45.9%67.0%Up 10.2 ptsDown 10.9 pts
Operating expenses$1,793$1,749$1,375Up 3%Up 30%
Operating income$1,536$1,325$3,386Up 16%Down 55%
Net income$1,456$1,292$2,973Up 13%Down 51%
Diluted earnings per share$0.58$0.51$1.17Up 14%Down 50%

Outlook
NVIDIA’s outlook for the fourth quarter of fiscal 2023 is as follows:

  • Revenue is expected to be $6.00 billion, plus or minus 2%.
  • GAAP and non-GAAP gross margins are expected to be 63.2% and 66.0%, respectively, plus or minus 50 basis points.
  • GAAP and non-GAAP operating expenses are expected to be approximately $2.56 billion and $1.78 billion, respectively.
  • GAAP and non-GAAP other income and expense are expected to be an income of approximately $40 million, excluding gains and losses from non-affiliated investments.
  • GAAP and non-GAAP tax rates are expected to be 9.0%, plus or minus 1%, excluding any discrete items.

Highlights

NVIDIA achieved progress since its previous earnings announcement in these areas:

Data Center

  • Third-quarter revenue was $3.83 billion, up 31% from a year ago and up 1% from the previous quarter.
  • Began shipping theNVIDIA® H100 Tensor Core GPU based on the new NVIDIA Hopper™ architecture, with first systems available now.
  • Announced at the SC22 supercomputing conference that NVIDIA H100 and Quantum-2 systems are being broadly adopted; that NVIDIA Omniverse™ connects to leading scientific computing visualization software; and that NVIDIA powers 90% of the new systems in the latest TOP500 list of the world’s fastest supercomputers, including the H100-powered system deployed at the Flatiron Institute, in the U.S, which topped the Green500 list of the most-efficient systems.
  • Announced a multi-year collaboration with Microsoft to help enterprises train, deploy and scale AI, including state-of-the-art models, through Microsoft Azure, which is deploying tens of thousands of A100 and H100 GPUs.
  • Announced a multi-year partnership with Oracle to bring NVIDIA’s full accelerated computing stack to Oracle Cloud Infrastructure, which is deploying tens of thousands more NVIDIA GPUs, including A100 and H100 accelerators.
  • Announced a partnership with Nuance Communications to bring AI-based diagnostic tools to clinical radiologists.
  • Announced that Rescale is integrating NVIDIA AI Enterprise software into its HPC-as-a-service offering.
  • Announced two new large language model cloud AI servicesNVIDIA NeMo™ LLM and NVIDIA BioNeMo™ LLM — enabling developers to easily adapt LLMs and deploy customized AI applications for content generation, text summarization, protein structure and biomolecular property predictions, and more.
  • Announced that NVIDIA H100 Tensor Core GPUs set records in both AI inferenceand AI training on all workloads in their first appearances on the MLPerf AI benchmarks.
  • Unveiled the second generation of NVIDIA OVX™, powered by the Ada Lovelace GPU architecture and enhanced networking technology, enabling the creation of3D worlds with groundbreaking real-time graphics, AI and digital-twin simulation capabilities.
  • Announced a new data center solution delivering zero-trust security optimized for VMware vSphere 8 combining Dell PowerEdge servers with NVIDIA BlueField® DPUs, NVIDIA GPUs and NVIDIA AI Enterprise software.

Gaming

  • Third-quarter revenue was $1.57 billion, down 51% from a year ago and down 23% from the previous quarter.
  • Launched GeForce RTX™ 4090, the first Ada Lovelace architecture GPU for gamers and creators, which quickly sold out in many locations. Sales began today of the RTX 4080.
  • Introduced NVIDIA DLSS 3, an AI-powered performance multiplier for a new era of NVIDIA RTX™ neural rendering. More than 240 DLSS games and applications are now available, and 35 have announced support for DLSS 3, including Marvel’s Spider-Man Remastered, Cyberpunk 2077 and Microsoft Flight Simulator.
  • Shipped 37 new RTX games and apps, pushing up the total available to more than 360.
  • Expanded the GeForce NOW™ library with 85+ games, bringing the total available games to 1,400+.

Professional Visualization

  • Third-quarter revenue was $200 million, down 65% from a year ago and down 60% from the previous quarter.
  • Introduced NVIDIA Omniverse™ Cloud, the company’s first software- and infrastructure-as-a-service offering, with a comprehensive suite of cloud services for artists, developers and enterprise teams to access metaverse applications.

Automotive and Embedded

  • Third-quarter revenue was $251 million, up 86% from a year ago and up 14% from the previous quarter.
  • Introduced NVIDIA DRIVE Thor™, the company’s 2,000 TFLOPS next-generation centralized computer for safe and secure autonomous vehicles, with Geely-owned ZEEKR integrating it into electric vehicles in 2025.
  • Marked the launch of the all-electric Volvo EX90, powered by NVIDIA DRIVE Orin and Xavier™, and Polestar 3, the brand’s first SUV, which runs on the NVIDIA DRIVE™ platform.
  • Announced that Hozon Auto’s Neta brand will build future electric vehicles on the NVIDIA DRIVE Orin™ platform, enabling automated driving and intelligent features.
  • Announced new DRIVE IX ecosystem partners that are building on the company’s open AI cockpit software stack to deliver interactive features for vehicles.
  • Launched Jetson Orin Nano™ system-on-modules that deliver up to 80x the performance over the prior generation for entry-level edge AI and robotics.

CFO Commentary
Commentary on the quarter by Colette Kress, NVIDIA’s executive vice president and chief financial officer, is available at https://investor.nvidia.com/.

Conference Call and Webcast Information
NVIDIA will conduct a conference call with analysts and investors to discuss its third quarter fiscal 2023 financial results and current financial prospects today at 2 p.m. Pacific time (5 p.m. Eastern time). A live webcast (listen-only mode) of the conference call will be accessible at NVIDIA’s investor relations website, https://investor.nvidia.com. The webcast will be recorded and available for replay until NVIDIA’s conference call to discuss its financial results for its fourth quarter and fiscal 2023.

Non-GAAP Measures
To supplement NVIDIA’s condensed consolidated financial statements presented in accordance with GAAP, the company uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP other income (expense), net, non-GAAP net income, non-GAAP net income, or earnings, per diluted share, and free cash flow. For NVIDIA’s investors to be better able to compare its current results with those of previous periods, the company has shown a reconciliation of GAAP to non-GAAP financial measures. These reconciliations adjust the related GAAP financial measures to exclude acquisition termination costs, stock-based compensation expense, acquisition-related and other costs, contributions, IP-related costs, legal settlement costs, restructuring costs, gains and losses from non-affiliated investments, interest expense related to amortization of debt discount, the associated tax impact of these items where applicable and domestication tax benefit. Free cash flow is calculated as GAAP net cash provided by operating activities less both purchases of property and equipment and intangible assets and principal payments on property and equipment and intangible assets. NVIDIA believes the presentation of its non-GAAP financial measures enhances the user’s overall understanding of the company’s historical financial performance. The presentation of the company’s non-GAAP financial measures is not meant to 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 be different from non-GAAP measures used by other companies.

NVIDIA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
(Unaudited)
Three Months EndedNine Months Ended
October 30,October 31,October 30,October 31,
2022202120222021
Revenue$5,931$7,103$20,923$19,271
Cost of revenue2,7542,4729,4006,795
Gross profit3,1774,63111,52312,476
Operating expenses
Research and development1,9451,4035,3873,802
Sales, general and administrative6315571,8151,603
Acquisition termination cost--1,353-
Total operating expenses2,5761,9608,5555,405
Income from operations6012,6712,9687,071
Interest income88715220
Interest expense(65)(62)(198)(175)
Other, net(11)22(29)160
Other income (expense), net12(33)(75)5
Income before income tax6132,6382,8937,076
Income tax expense (benefit)(67)174(61)327
Net income$680$2,464$2,954$6,749
Net income per share:
Basic$0.27$0.99$1.18$2.71
Diluted$0.27$0.97$1.17$2.67
Weighted average shares used in per share computation:
Basic2,4832,4992,4952,493
Diluted2,4992,5382,5172,532
NVIDIA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
October 30,January 30,
20222022
ASSETS
Current assets:
Cash, cash equivalents and marketable securities$13,143$21,208
Accounts receivable, net4,9084,650
Inventories4,4542,605
Prepaid expenses and other current assets718366
Total current assets23,22328,829
Property and equipment, net3,7742,778
Operating lease assets927829
Goodwill4,3724,349
Intangible assets, net1,8502,339
Deferred income tax assets2,7621,222
Other assets3,5803,841
Total assets$40,488$44,187
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable$1,491$1,783
Accrued and other current liabilities4,1152,552
Short-term debt1,249-
Total current liabilities6,8554,335
Long-term debt9,70110,946
Long-term operating lease liabilities798741
Other long-term liabilities1,7851,553
Total liabilities19,13917,575
Shareholders' equity21,34926,612
Total liabilities and shareholders' equity$40,488$44,187
NVIDIA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months EndedNine Months Ended
October 30,October 31,October 30,October 31,
2022202120222021
Cash flows from operating activities:
Net income$680$2,464$2,954$6,749
Adjustments to reconcile net income to net cash
provided by operating activities:
Stock-based compensation expense7455591,9711,453
Depreciation and amortization4062981,118865
Losses (gains) on investments in non affiliates, net11(21)35(152)
Deferred income taxes(532)(20)(1,517)(182)
Acquisition termination cost--1,353-
Other(45)10(27)25
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable410(366)(258)(1,523)
Inventories(563)(118)(1,848)(400)
Prepaid expenses and other assets247(1,575)(1,307)(1,557)
Accounts payable(917)141(358)385
Accrued and other current liabilities(92)(8)1,175159
Other long-term liabilities42155102253
Net cash provided by operating activities3921,5193,3936,075
Cash flows from investing activities:
Proceeds from maturities of marketable securities5,8092,54516,7927,780
Proceeds from sales of marketable securities752111,806916
Purchases of marketable securities(2,188)(6,752)(9,764)(16,020)
Purchases related to property and equipment and intangible assets(530)(221)(1,324)(703)
Acquisitions, net of cash acquired-(203)(49)(203)
Investments and other, net(18)(18)(83)(14)
Net cash provided by (used in) investing activities3,148(4,438)7,378(8,244)
Cash flows from financing activities:
Proceeds related to employee stock plans143149349277
Payments related to repurchases of common stock(3,485)-(8,826)-
Payments related to tax on restricted stock units(294)(440)(1,131)(1,282)
Dividends paid(100)(100)(300)(298)
Principal payments on property and equipment and intangible assets(18)(22)(54)(62)
Issuance of debt, net of issuance costs-(8)-4,977
Repayment of debt-(1,000)-(1,000)
Other1-1(2)
Net cash provided by (used in) financing activities(3,753)(1,421)(9,961)2,610
Change in cash and cash equivalents(213)(4,340)810441
Cash and cash equivalents at beginning of period3,0135,6281,990847
Cash and cash equivalents at end of period$2,800$1,288$2,800$1,288
NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In millions, except per share data)
(Unaudited)
Three Months EndedNine Months Ended
October 30,July 31,October 31,October 30,October 31,
20222022202120222021
GAAP gross profit$3,177$2,915$4,631$11,523$12,476
GAAP gross margin53.6%43.5%65.2%55.1%64.7%
Acquisition-related and other costs (A)12012186335258
Stock-based compensation expense (B)323844108102
IP-related costs----8
Non-GAAP gross profit$3,329$3,074$4,761$11,966$12,844
Non-GAAP gross margin56.1%45.9%67.0%57.2%66.6%
GAAP operating expenses$2,576$2,416$1,960$8,555$5,405
Stock-based compensation expense (B)(713)(611)(515)(1,863)(1,351)
Acquisition-related and other costs (A)(54)(54)(70)(164)(224)
Restructuring costs (C)(16)--(16)-
Contributions-(2)-(2)-
Acquisition termination cost---(1,353)-
Legal settlement costs---(7)-
Non-GAAP operating expenses$1,793$1,749$1,375$5,150$3,830
GAAP income from operations$601$499$2,671$2,968$7,071
Total impact of non-GAAP adjustments to income from operations9358267153,8481,943
Non-GAAP income from operations$1,536$1,325$3,386$6,816$9,014
GAAP other income (expense), net$12$(24)$(33)$(75)$5
(Gains) losses from non-affiliated investments117(20)36(153)
Interest expense related to amortization of debt discount11133
Non-GAAP other income (expense), net$24$(16)$(52)$(36)$(145)
GAAP net income$680$656$2,464$2,954$6,749
Total pre-tax impact of non-GAAP adjustments9478336963,8871,793
Income tax impact of non-GAAP adjustments (D)(171)(197)(187)(649)(381)
Domestication tax adjustments----(252)
Non-GAAP net income$1,456$1,292$2,973$6,192$7,909
Diluted net income per share
GAAP$0.27$0.26$0.97$1.17$2.67
Non-GAAP$0.58$0.51$1.17$2.46$3.12
Weighted average shares used in diluted net income per share computation2,4992,5162,5382,5172,532
GAAP net cash provided by operating activities$392$1,271$1,519$3,393$6,075
Purchases related to property and equipment and intangible assets(530)(432)(221)(1,324)(703)
Principal payments on property and equipment(18)(15)(22)(54)(62)
Free cash flow$(156)$824$1,276$2,015$5,310
(A)Acquisition-related and other costs are comprised of amortization of intangible assets, transaction costs, and certain compensation charges and are included in the following line items:
Three Months EndedNine Months Ended
October 30,July 31,October 31,October 30,October 31,
20222022202120222021
Cost of revenue$120$121$86$335$258
Research and development$10$10$7$29$10
Sales, general and administrative$44$44$63$135$214
(B) Stock-based compensation consists of the following:
Three Months EndedNine Months Ended
October 30,July 31,October 31,October 30,October 31,
20222022202120222021
Cost of revenue$32$38$44$108$102
Research and development$530$452$363$1,365$935
Sales, general and administrative$183$159$152$498$416
(C) Costs related to Russia branch office closure.
(D) Income tax impact of non-GAAP adjustments, including the recognition of excess tax benefits or deficiencies related to stock-based compensation under GAAP accounting standard (ASU 2016-09).
NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK
Q4 FY2023 Outlook
($ in millions)
GAAP gross margin63.2%
Impact of stock-based compensation expense, acquisition-related costs, and other costs2.8%
Non-GAAP gross margin66.0%
GAAP operating expenses$2,560
Stock-based compensation expense, acquisition-related costs, and other costs(780)
Non-GAAP operating expenses$1,780

As a seasoned technology analyst and enthusiast with an in-depth understanding of the semiconductor industry, particularly focused on NVIDIA (NASDAQ: NVDA), I bring a wealth of knowledge to decipher the intricate details of the provided information.

Let's delve into the key concepts and components highlighted in the NVIDIA third-quarter report:

  1. Revenue and Financial Performance:

    • NVIDIA reported a total revenue of $5.93 billion for the third quarter ended October 30, 2022.
    • The revenue showed a decline of 17% from the same period a year ago and a 12% decrease from the previous quarter.
    • Despite the revenue decline, the Data Center segment recorded a notable performance with revenue of $3.83 billion, up 31% from a year ago.
    • The company returned $3.75 billion to shareholders during the quarter.
  2. Earnings and Profitability:

    • GAAP earnings per diluted share for the quarter were $0.27, reflecting a significant drop of 72% from a year ago.
    • Non-GAAP earnings per diluted share were $0.58, down 50% from a year ago but up 14% from the previous quarter.
    • The gross margin for the quarter was 53.6%, showing a significant decrease from the previous year.
  3. CEO Commentary and Strategic Initiatives:

    • Jensen Huang, NVIDIA's founder and CEO, emphasized the company's adaptability to the macro environment, addressing inventory levels, and paving the way for new products.
    • The CEO highlighted the successful launch of various platforms, including Ada Lovelace RTX graphics, Hopper AI computing, BlueField and Quantum networking, Orin for autonomous vehicles and robotics, and Omniverse.
  4. Accelerated Computing and Market Trends:

    • NVIDIA's focus on accelerated computing was underscored as a solution to overcome limitations posed by physics in general-purpose computing.
    • Accelerated computing was mentioned as crucial for meeting the increased demands of AI, enabling substantial productivity improvements while being cost-effective and environmentally friendly.
  5. Shareholder Returns and Financial Outlook:

    • NVIDIA returned $3.75 billion to shareholders in share repurchases and cash dividends during the third quarter.
    • As of October 30, 2022, the company had $8.28 billion remaining under its share repurchase authorization through December 2023.
    • The outlook for the fourth quarter of fiscal 2023 includes an expected revenue of $6.00 billion, with gross margins at 63.2% (GAAP) and 66.0% (non-GAAP).
  6. Segment Performance:

    • The Data Center segment witnessed a robust performance with third-quarter revenue of $3.83 billion, up 31% from a year ago.
    • Notable achievements include the launch of the NVIDIA H100 Tensor Core GPU and partnerships with Microsoft, Oracle, and Nuance Communications.
  7. Gaming, Professional Visualization, Automotive, and Embedded Segments:

    • Gaming segment revenue for the third quarter was $1.57 billion, down 51% from a year ago.
    • Professional Visualization revenue was $200 million, down 65% from a year ago.
    • Automotive and Embedded segment revenue was $251 million, up 86% from a year ago.
  8. CFO Commentary and Financial Statements:

    • Colette Kress, NVIDIA’s executive vice president and chief financial officer, provided commentary on the quarter.
    • The condensed consolidated financial statements, balance sheets, and statements of cash flows were presented.
  9. Non-GAAP Measures and Reconciliation:

    • Non-GAAP measures were used to supplement GAAP financial statements, providing a clearer understanding for investors.
    • The reconciliation of GAAP to non-GAAP financial measures was presented, including adjustments for stock-based compensation, acquisition-related costs, and other factors.

In summary, NVIDIA's third-quarter report reflects a dynamic market environment, with strategic initiatives in accelerated computing, robust performance in the Data Center segment, and an emphasis on returning value to shareholders. The outlook for the fourth quarter suggests optimism in the face of evolving market conditions.

NVIDIA Announces Financial Results for Third Quarter Fiscal 2023 (2024)
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