Nvidia Shares Jump on Strong Fourth Quarter Results

Nvidia reported its fourth quarter 2019 financial results on Thursday that beat expectations.

The chipmaker saw its shares soar over 5% in after-hours trading on the earnings release. For the quarter, Nvidia reported revenue of $2.21 billion compared to $2.2 billion expected. Earnings per share of $0.80 was higher by two cents than what analysts had expected.

It was last month that the company’s CEO Jensen Huang sent a letter to shareholders updating the company’s outlook for the fourth quarter, lowering revenue from $2.7 billion to $2.2 billion.

Gaming revenue for the quarter was $954 million. Compared to the gaming revenue the company saw in the year ago period at $1.74 billion, this was a big drop.

The data center business saw a year-over-year jump from $606 million to $679 million.

CFO Colette Kress said on the earnings call, “As you know we lowered fourth quarter guidance for January 28th and the results are in line with our pre-announcement. Q4 revenue was $2.21 billion, down 24% from a year earlier, driven primarily by 45% year-on-year decline in gaming. Full year revenue was $11.72 billion, up 21% from the previous year.”

“Starting with our gaming business revenue. Revenue of $954 million was down 45% year-on-year and down 46% sequentially, weaker than our expectations heading into the quarter. Full year revenue was up 13% percent to $6.25 billion. Three factors contributed to the Q4 gaming revenue decline. First, post crypto inventory of GPUs in the channel caused us to reduce shipments in order to allow excess channel inventory to sell through. We expect channel inventory to normalize in Q1 in line with one to two quarter timeline we had outlined on our previous earnings calls,” she added.

“Second, deteriorating macro economic conditions, particularly in China, impacted consumer demand for our GPUs; and third, sales of certain high end GPUs using our new Turing architecture, including the GeForce RTX 2080 and 2070 were lower than we expected for the launch of a new architecture. These products deliver a revolutionary leap in performance and innovation with real time ray-tracing in AI, but some customers may have delayed their purchase while waiting for lower price points for further demonstrations of the RTX technology and actual gains. The significant volatility in our gaming business over the last few quarters has been challenging to model.”

Disclaimer: We have no position in NVIDIA Corporation (NASDAQ: NVDA) and have not been compensated for this article.