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Nvidia Q1 Earnings Live Blog

Real Money's Eric Jhonsa analyzes Nvidia’s fiscal first quarter 2022 earnings report and call with analysts.
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Investors are expecting big things from Nvidia  (NVDA)  when it reports fiscal first quarter 2022 results after the close on Wednesday. The semiconductor giant has benefited from strong demand for gaming and cloud computing during the pandemic, as well as usage of its chips by cryptocurrency miners.

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According to analysts polled by FactSet, Nvidia is expected to report adjusted EPS of $3.29 (up 83% year-over-year) on revenues of $5.40 billion (up 75%) for the fiscal first quarter.

And for the fiscal second quarter ending in July, analysts are expecting adjusted EPS of $3.30 (up 51%) on revenues of $5.47 billion (up 42%).

Starting at 4 p.m. ET, RealMoney's tech columnist, Eric Jhonsa, will be previewing and then analyzing Nvidia's earnings report, which is due out at 4:20 p.m. ET. And he'll continue to blog about the call with analysts that's scheduled to begin at 5 p.m. ET.

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6:14 PM ET: Nvidia's call has ended. Shares are currently down 0.8% AH to $623.20 after Nvidia beat its April quarter revenue consensus by $266M and issued July quarter sales guidance that was $890M above consensus at the midpoint.

With sales of mining-focused CMP GPUs (launched in February) totaling $155M in FQ1 and forecast to total ~$400M in FQ2, Nvidia is getting a clear top-line boost from crypto miners. However, Nvidia also guided for Gaming revenue (up 11% Q/Q in FQ1) and Data Center revenue (up 8% Q/Q) to grow sequentially again in FQ2, while signaling that they'd grow further in 2H21 amid strong demand from gamers, hyperscalers and traditional enterprises.

Thanks for joining us.

6:07 PM ET: Huang with some closing remarks. Reiterates Nvidia's goals of being a "data center-scale" computing company and democratizing access to AI computing. Also says he'll have more to share in the future about Nvidia's Clara platform for healthcare AI projects. Declares Nvidia "has transformed its business model beyond chips," as it rolls out software solutions such as Omniverse, its enterprise AI suite and offerings for Mercedes owners in partnership with Mercedes-Benz.

6:03 PM ET: Question about whether Nvidia still expects Gaming revenue to grow Q/Q through the year, and whether Data Center revenue could do the same.

Kress: We have additional supply coming. We expect to grow as we go into the second half of the year, including for Gaming. We only guide a quarter at a time, but we do expect second-half Gaming growth given how strong demand is.

She also says Nvidia sees "a time to accelerate" for Data Center in the 2H21, aided by strong demand, product ramps and improved supply.

5:58 PM ET: Question about Nvidia's enterprise AI software stack and how much it brings down AI investment costs. Also one about the potential impact of new government support for chip manufacturing investments.

Huang: Nvidia's GPUs support major long-term projects, such as quantum computing efforts, developing natural language models, etc. We now have an end-to-end suite of software that addresses enterprise needs as they try to build mission-critical applications on top. This software also helps OEMs, VARs, etc. bring solutions to market. There are only 10 big hyperscale clients, whereas there are thousands of enterprises to sell to with the help of partners.

5:53 PM ET: Question about what impact a loss of demand from crypto miners would have, and how much Gaming revenue is currently crypto-related.

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Huang: It's hard to estimate how much crypto mining is done. But one can assume the vast majority is done by professional crypto miners. You can use GeForce GPUs for mining, but you can't use CMP GPUs for gaming. We hope the CMP GPUs will satisfy the miners and stay in mines. We're at the beginning of our RTX 30 cycle, there's still a lot of gamer demand to address. Interest in ray-tracing is growing. And gaming is no longer just about gaming -- it's infused into eSports, art, social activity. It has a very large cultural impact. We expect to see strong RTX demand for quite some time due to these factors.

5:48 PM ET: Question about RTX 30 momentum, and one about when BlueField DPUs will become a material revenue contributor.

Kress: We still have a large opportunity to migrate more of our gaming customer base to RTX GPUs, as ray-tracing adoption keeps growing.

Huang: Modern data center architectures require a zero-trust approach to security, one that prevents a compromised server from affecting other servers. They also need to be software-defined as workloads become more complex - over half of all server CPU cycles in a data center involve non-application tasks. There's a need to redefine data center architectures, with security and non-application activity offloaded to DPUs. BlueField will offload much of the software processing done by CPUs, while also making data centers more secure. We expect meaningful revenue contribution from BlueField next year. You can tell I'm excited about this, we've put a lot of work into this effort.

5:40 PM ET: Question about the major Q/Q increase in Nvidia's purchase obligations and what it signals for 2H Data Center demand. Also one about expected sales to enterprises.

Kress: Long lead times now exist for Data Center products, and that has much to do with the increase in purchase obligations.

Huang: We're seeing strength across the board in Data Center, and that includes enterprises. AI-related demand continues growing. We're democratizing access to AI computing through our platforms. We're going to market with ISVs such as VMWare, as well as OEMs, resellers, etc. More than 50% of our Data Center business involves vertical industries. At the same time, hyperscaler demand is strengthening as AI investments keep increasing, and so is supercomputing demand.

5:32 PM ET: First question is about FQ2 sales guidance, and one about Mellanox expectations.

Kress: We expect growth across platforms. Outside of CMP, the lion's share of our FQ2 sales growth will come from Data Center and Gaming. Both will contribute quite well to our growth. Mellanox continued to grow in FQ1, and we also expect it to grow in FQ2.

5:29 PM ET: The Q&A session is starting.

5:29 PM ET: Kress indicates Nvidia's FQ2 report will arrive on Aug. 18.

5:28 PM ET: Nvidia has pared its losses some after those comments. Shares are now down 0.5% AH.

5:27 PM ET: Regarding FQ2 guidance, Kress says Nvidia expects broad-based Y/Y revenue growth from all major businesses. Q/Q growth expected for both compute and networking Data Center segment sales. Gaming revenue is also expected to be up Q/Q.

5:25 PM ET: Regarding the ARM acquisition, which continues being closely scrutinized by regulators, Kress says Nvidia is still on track to close the deal by early 2022.

5:22 PM ET: Kress is going over Nvidia's GTC conference announcements, including the launch of pre-trained AI models optimized for Nvidia GPUs, such as the Jarvis framework for conversational AI.

Jensen Huang has talked up the long-term revenue potential of such value-added offerings on a few occasions.

5:17 PM ET: Kress goes over Nvidia's AI inference momentum, noting inference-related demand was strong for both the T4 and A100 GPUs. Also says Mellanox had a strong quarter, while going over the recent unveiling of its BlueField-3 DPU, which can offload a number of server tasks from server CPUs.

5:15 PM ET: Now onto Data Center. Kress reiterates hyperscaler demand fueled much of Nvidia's FQ1 Data Center growth, with demand driven by both internal workloads and third-party enterprises/startups.

Says Nvidia expects demand for its flagship A100 server GPU to continue to strengthen, and that demand from traditional enterprises (referred to as "vertical industries") for its DGX servers is also growing. 

5:13 PM: Kress goes over Nvidia's numerous design wins for its Drive platforms across passenger cars, robotaxis, trucks, etc. 

5:12 PM ET: Kress: Our automotive design win pipeline now exceeds $8B through fiscal 2027.

5:11 PM ET: Kress is now going over the momentum for Nvidia's Pro Viz (workstation/visualization GPU) business. Also says Nvidia sees "a significant revenue opportunity" for its Omniverse real-time simulation/collaboration platform.

5:10 PM ET: That's up from reported FQ1 CMP revenue of $155M. Nvidia's stock dipped a little on the FQ2 CMP guidance: Shares are now down 1.8% AH.

5:08 PM ET: Kress: We've taken actions to reduce sales of gaming GPU sales to miners and increase their availability to gamers. Our FQ2 outlook assumes CMP (mining GPU) revenue of $400M.

5:07 PM ET: Kress: Nvidia's Reflex technology (reduces game latency) is becoming a must-have feature for eSports gamers.

5:05 PM ET: Kress goes over recent notebook GPU design wins. Says more than 140 RTX 30-powered laptops have been designed.

5:04 PM ET: Kress is talking. She starts by going over Nvidia's FQ1 gaming performance. Notes Y/Y Gaming growth has accelerated for 3 quarters in a row, and that desktop and laptop GPU sales both set records. Adds that Nvidia expects gaming GPUs to remain supply-constrained into the second half of the year.

5:02 PM ET: IR chief Simona Jankowski is going over Nvidia's safe-harbor statement. As usual, CEO Jensen Huang and CFO Colette Kress will be on the call. Typically, Kress shares opening remarks, after which Kress and Huang both field questions from analysts.

5:01 PM ET: The call is starting.

4:57 PM ET: Nvidia's call will be starting in a few minutes. Here's the webcast link.

4:54 PM ET: Nvidia ended the April quarter with $12.67B in cash and $7B in debt.

4:52 PM ET: Inventory rose by $160M Q/Q to $1.99B. Nonetheless, thanks to the demand environment, days of inventory fell by 8 Q/Q to 89.

Notably, inventory purchase obligations rose by $920M Q/Q to $3.46B, something Nvidia attributes to longer lead times for Data Center products and with other component suppliers.

4:48 PM ET: Nvidia's non-GAAP operating expenses were roughly flat Q/Q and (thanks in part to Mellanox) up 45% Y/Y to $1.19B. GAAP opex was up 1% Q/Q and 63% Y/Y to $1.67B.

For the July quarter, Nvidia is guiding for non-GAAP opex of $1.26B and GAAP opex of $1.76B.

4:46 PM ET: As a reminder, Nvidia's call is due to start at 5PM ET. I'll be around to cover.

4:45 PM ET: Nvidia's FQ1 sales by segment and market platform. The huge Data Center growth was due to both organic growth and Mellanox, with each benefiting from strong hyperscaler demand. Gaming growth was fully organic.

NVDA FQ1 sales

4:40 PM ET: Shares are now down 0.5% AH. It'll be interesting to see how they trade during the call, as Nvidia provides more color about its FQ1 numbers and FQ2 guidance. Any comments about how much mining-related revenue is baked into the FQ2 sales guidance will especially be closely watched.

4:38 PM ET: Nvidia on its Data Center sales:

"The year-on-year revenue growth was driven primarily by the Mellanox acquisition and the ramp of NVIDIA Ampere GPU architecture products into vertical industries and hyperscale customers. Sequentially, growth in Data Center came from both compute and networking products, primarily driven by hyperscale customers."

4:37 PM ET: Nvidia on its Gaming sales:

"We continued to benefit from strong sales of our GeForce RTX 30 Series based on the NVIDIA Ampere architecture. We believe Gaming also benefited from cryptocurrency mining demand, although it is hard to determine to what extent."

4:34 PM ET: Professional Visualization revenue, which covers Nvidia's Quadro and RTX A-series GPUs, rose 21% Q/Q and Y/Y to $372M, beating a $315M consensus.

Automotive revenue was up 6% Q/Q and 1% Y/Y to $154M, slightly beating a $152M consensus.

4:32 PM ET: Notably, Nvidia's "OEM and Other" revenue, which among other things includes sales of non-gaming GPUs (such as GPUs targeting crypto miners), rose 114% Q/Q and 137% Y/Y to $327M, trouncing a $199M consensus.

Nvidia says in the CFO commentary that mining-specific GPUs accounted for $155M of this revenue. That might have a bit to do with the market's subdued response to Nvidia's strong top and bottom-line numbers.

4:29 PM ET: Here's the CFO commentary, for those interested.

4:27 PM ET: GAAP and non-GAAP gross margin came in at 64.1% and 66.2%, respectively. That's a little above guidance of 63.8% and 66%.

For the July quarter, Nvidia is guiding for a GAAP GM of 64.6% and a non-GAAP GM of 66.5%.

4:25 PM ET: Gaming segment revenue (it covers gaming GPUs and console processor sales) rose 11% Q/Q and 106% Y/Y to $2.76B, topping a $2.72B consensus.

Data Center revenue (it covers server GPUs, DGX server sales and Mellanox) rose 8% Q/Q and 79% Y/Y to $2.05B, beating a $2.005B consensus.

4:22 PM ET: Shares are for now down 2% AH. The results look pretty good at first glance, but as previously noted, pre-earnings expectations were high.

4:21 PM ET: For the July quarter, Nvidia expects revenue of $6.3B, +/- 2%. That's well above a $5.47B consensus.

4:21 PM ET: Results are out. FQ1 revenue of $5.66B beats a $5.4B  consensus. Non-GAAP EPS of $3.66 beats a $3.29 consensus.

4:17 PM ET: Also bound to be closely watched: Any comments Nvidia shares about the impact of GPU sales to crypto miners, whether via gaming or mining-specific GPUs. Nvidia recently announced it would cut the Ethereum hash rate for new copies of its most powerful gaming GPUs in order to boost availability to gamers.

4:13 PM ET: Naturally, with gaming and server GPUs both in short supply, any commentary Nvidia shares about wafer supplies from foundry partners TSMC and Samsung will be closely watched.

The numbers and commentary recently shared by other major TSMC clients, such as AMD, Apple and Mediatek, suggest they've been able to secure more leading-edge process supply from TSMC, and the same might be true for Nvidia. Nvidia's Ampere-architecture server GPUs are made by TSMC, while its Ampere gaming GPUs are made by Samsung.

4:06 PM ET: As was the case 3 months ago, expectations are high: Nvidia is going into its report sporting a $391B market cap, with shares up ~20% YTD and ~80% over the last 12 months amid sky-high demand for both its gaming and server GPUs.

4:04 PM ET: For the July quarter (Nvidia typically shares revenue guidance within its report), the revenue consensus is at $5.47B (+42%). 

4:03 PM ET: On average, analysts polled by FactSet expect Nvidia to report April quarter revenue of $5.4B (+75% Y/Y, thanks to both organic growth and the Mellanox acquisition, which closed in April 2020), GAAP EPS of $2.52 and non-GAAP EPS of $3.29.

4:00 PM ET: Hi. I'll be live-blogging Nvidia's April quarter report (expected around 4:20 ET) and earnings call (scheduled for 5:00).