Nvidia’s third-quarter revenue of $3 billion: net profit fell 27% year-on-year

Nvidia today reported its third-quarter financial results for fiscal 2020. The report showed That Nvidia’s third-quarter revenue was $3,014 million, down 5 percent from $3.181 billion a year earlier, and net profit was $899 million, down 27 percent from $1.23 billion a year earlier.

The company’s third-quarter results fell short of Wall Street analysts’ expectations and its fourth-quarter earnings outlook for fiscal 2020 fell short of expectations, sending its shares tumbling more than 16 percent after the session.

Nvidia's third-quarter revenue of $3 billion net profit fell 27% year-on-year

Key results for the third quarter:

In the quarter ended October 27, Nvidia’s net income was $899 million, down 27 percent from $1.23 billion a year earlier, up 63 percent from $552 million in the previous quarter, and diluted earnings per share were $1.45, down 26 percent from $1.97 a year earlier. That’s up 61 percent from $0.90 in the previous quarter.

Nvidia net profit for the third quarter, excluding certain one-time items (excluding GAAP), was $1.103 billion, down 4% from $1.151 billion a year earlier and up 45% from $762 million in the previous quarter Diluted earnings per share were $1.78, down 3 percent from $1.84 a year earlier and up 44 percent from $1.24 in the previous quarter, beating analysts’ expectations. According to Yahoo Financial, 28 analysts had expected Nvidia’s third-quarter earnings of $1.57 per share.

Nvidia’s third-quarter revenue was $3,014 million, down 5 percent from $3.181 billion a year earlier and up 17 percent from $2.579 billion in the previous quarter and beating analysts’ expectations. Analysts had expected Nvidia’s third-quarter revenue to be $2.91 billion, according to Yahoo Financial.

Nvidia’s gross margin in the third quarter was 63.6 per cent, up 320 basis points from 60.4 per cent a year earlier and 380 basis points from 59.8 per cent in the previous quarter. In line with U.S. GAAP, Nvidia’s gross profit in the third quarter was 64.1%, up 310 basis points from 61.0% a year earlier and 400 basis points from 60.1% in the previous quarter.

Nvidia’s operating expenses were $989 million in the third quarter, up 15 percent from $863 million a year earlier and 2 percent from $970 million in the previous quarter. Of this total, research and development expenditure was $712 million, up from $605 million a year earlier, and sales, general services and administration expenditure was $277 million, up from $258 million a year earlier.

In line with U.S. GAAP, Nvidia’s operating expenses in the third quarter were $774 million, up 6 percent from $730 million a year earlier and up 3 percent from $749 million in the previous quarter.

Nvidia’s third-quarter operating profit was $927 million, down 12 percent from $1,058 million a year earlier and up 62 percent from $571 million in the previous quarter. In line with U.S. General Accounting Standards, Nvidia’s third-quarter operating profit was $1.156 billion, down 4 percent from $1.21 billion a year earlier and up 44 percent from $802 million in the previous quarter.

Nvidia announced that it will pay a quarterly cash dividend of $0.16 per share to all registered shareholders as of November 29, 2019.

Performance Outlook:

Nvidia expects revenue to reach $2.95 billion in the fourth quarter of fiscal 2020, up 2 percent, less than analysts had expected. According to Yahoo Financial, 31 analysts had expected Nvidia’s fourth-quarter revenue of $3.06 billion on average.

Nvidia also expects gross margins to be 64.1% and 64.5%, respectively, in the fourth quarter of fiscal 2020, up and down by 50 basis points. Operating expenses are expected to be around $1.02 billion and $805 million, respectively, other income under and excluding U.S. GAAP is expected to be around $25 million, and u.S. GAAP-compliant tax rates are expected to be 9 percent, up or down 1 percent.

Share price changes:

On the day, Nvidia shares closed up $1.22, or 0.58 per cent, at $209.79 on the Nasdaq. In after-hours trading at 4.40pm EST (5.40am BST on the 15th), Nvidia shares rose another $1.94, or 0.92 per cent, to $211.73, near a 52-week high. In the past 52 weeks, Nvidia has traded at a high of $211.86 and a low of $206.53.

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