Key Takeaways

  • Nvidia's gross margin beat analysts' expectations.
  • Gross margin indicates how much profit a company generates from each dollar of sales. It is an especially important metric for sellers of commodity goods such as semiconductor chips.
  • Nvidia achieved record quarterly revenue in its gaming, data center, and professional visualization platforms.
Nvidia Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
Adjusted EPS Beat $3.66 $3.30
Revenue Beat $5.7B $5.4B
Gross Margin Beat 66.2% 65.8%

Source: Predictions based on analysts' consensus from Visible Alpha

Nvidia (NVDA) Financial Results: Analysis

Nvidia Corporation (NVDA) reported Q1 FY 2022 earnings that beat analysts' expectations. Adjusted earnings per share (EPS) surpassed analyst forecasts by a wide margin, rising 103.3% year over year (YOY). Nvidia's revenue came in above analyst estimates, up 83.8% compared to the year-ago quarter. Gross margin also exceed analyst expectations. The company's shares were down more than 0.5% in after-hours trading. Over the past year, Nvidia's shares have provided a total return of 80.3%, well above the S&P 500's total return of 40.3%.

NVDA Gross Margin

Nvidia's gross margin rose to 66.2% in the first quarter, its highest level in at least the past four years. Gross margin is a key metric that is calculated as total revenue minus cost of goods sold (COGS). It is usually then divided by total revenue to express it as a percent, allowing for easy comparison between different time periods or companies. Semiconductors are a commodity good, meaning that they are, to a large extent, fungible and their prices highly cyclical. Sellers of such goods have limited pricing power, which means it is essential to keep costs low to maximize profits when times are good.

NVDA Revenue Drivers

Nvidia announced that it hit record revenue in its gaming, data center, and professional visualization platforms. Gaming revenue rose 106% YOY, while data center revenue expanded 79% YOY and professional visualization revenue grew 21% YOY. Nvidia's original equipment manufacturer (OEM) and other revenue saw an increase of 137% YOY, which was primarily driven by the addition of cryptocurrency mining processors. There has been a boom in cryptocurrency trading and mining over the past year, which has contributed to the global semiconductor shortage.

NVDA Outlook

For Q2 FY 2022, Nvidia expects revenue to be approximately $6.3 billion. It estimates that gross margin will be about 66.5%.

Last week, Nvidia announced a four-for-one stock split that will be payable in the form of a stock dividend if approved at the company's annual meeting on June 3, 2021. If the stock split is approved by stockholders, the number of shares of common stock will increase from 2 billion to 4 billion.

Nvidia's next earnings report (for Q2 FY 2022) is estimated to be released on Aug. 17, 2021.