- The gaming segment showed revenue growth of 11% compared to the previous quarter, but to justify NVIDIA's own financial forecast for the full year, it would have to grow almost twice
- Cryptocurrency revenue set the bar so high last year that now the company simply does not want to compare current figures with last year so as not to upset investors
- The server segment will also not help out NVIDIA in this situation.
The stock market reacted to the publication of NVIDIA's quarterly financials very restrained for the simple reason that a sharp decline in revenue compared to the same period last year was already predicted by most analysts. Indeed, a year ago, the company's revenue was pushed up by record high prices and sales volumes of video cards. Although NVIDIA management at that time did not announce the exact proportion of video card sales to gamers and miners, current financial statistics showed that miners could generate up to a billion dollars in additional revenue per quarter.
Many experts were confused by the fact that NVIDIA refused to update the revenue forecast for the entire 2019 calendar year, voicing only the forecast for the second fiscal quarter, which should end in July. The company's revenue for the current three-month period should increase by $330 million compared to the past, to $2,55 billion. In general, in the gaming segment, the company's revenue in the past quarter increased by 11% in sequential comparison, and it was due to sales of gaming graphics processors. However, it still lagged behind last year's level by 39%.
Silence is gold?
Specialized Resource tried to analyze the reasons for NVIDIA's refusal to form a forecast for the time remaining until the end of the fiscal year. To understand them, it is enough to first look at the press release of the last quarter, in which the forecast for the entire fiscal year 2020 was announced, and then the dynamics of changes in the company's revenue over the past eight quarters, all this information is available in open sources. So let's start with , published in February following the results of the 2019 fiscal year, which ended in the NVIDIA calendar at that time.
Then NVIDIA hoped that at the end of the 2019 calendar year it would earn either a little less, or at the level of the previous year - in monetary terms, the amount should have been $ 11,7 billion. Expectations for the second quarter of this year have already been announced ($ 2,55 billion), the result the first quarter in terms of revenue is also known ($2,22 billion). That is, in the first half of the year, NVIDIA expects to earn at least $4,77 billion. To reach the level of last year in terms of revenue, NVIDIA would have to earn at least $6,93 billion in the second half of this year. Even if we divide this amount in half into two quarters, it will come out at almost three and a half billion dollars per quarter, and this is slightly higher than the revenue of the most “well-fed” quarters of last year, when cryptocurrency revenues flowed like a golden river.
If we consider separately the revenue in the gaming segment, then here NVIDIA would have to accomplish a feat in the second half of the year, gaining $ 1,9 billion per quarter, to fulfill the February forecast. The company generated $1,055 billion in gaming revenue last quarter. In other words, if it could reach the level of last year, it would have to nearly double its gaming revenue in the last two quarters of this year.
February optimism gave way to sobering
One gets the impression that NVIDIA assesses its strength soberly and does not hope for a miracle. According to the results of the current year, it will earn less than it planned in February, and less than it did last year. The difference will be so noticeable that it is better not to voice this value to investors. NVIDIA gaming products will not be able to make a two-fold breakthrough in revenue in an environment where inventory has not yet returned to normal. Of course, the company could double prices in order to get a proportional increase in revenue, but it is not alone in the gaming market, and it is better not to test the elasticity of demand in this way.
Could NVIDIA count on the support of other market segments? The server segment has stopped growing at the same pace, and many component manufacturers emphasize this. Inventory built up last year prevents sellers from selling products released this year. NVIDIA itself in the previous quarter was forced to write off $128 million in the server direction. The company's management is also aware of the stagnation in the server market. The head of NVIDIA, if he connects hopes for future growth with this segment, then only in a slightly more distant future. NVIDIA's revenue in all other market segments is not large enough to make a multiple jump within this year.
Source: 3dnews.ru