Nvidia's net income for the first quarter of its 2020 financial year has fallen off a cliff, dropping 68 percent year-on-year - but founder and chief executive Jensen Huang claims the company is 'back on an upward trajectory'.
In a filing published late last night ahead of the company's earnings call, Nvidia confirmed that its 2020 financial year is off to a terrible start: While the company earned an impressive $2.22 billion in revenue, up one percent quarter-on-quarter, that's a whopping 31 percent down from the $3.21 billion it earned for the same quarter last year. Worse, the company's gross margin has slipped from 64.5 percent to an admittedly still-healthy 58.4 percent, while a 21 percent hike in operating expenses has led to a net income of just $394 million - a 30 percent drop quarter-on-quarter and massive 68 percent decline year-on-year.
The news isn't all bad, however: Investors had expected significantly worse results from the company following its poor 4Q19 results, and Nvidia founder and chief executive Jensen Huang claims the worst may be behind the company now. 'Nvidia is back on an upward trajectory,' Huang told investors and press during the company's earnings call. 'We've returned to growth in gaming, with nearly 100 new GeForce Max-Q laptops shipping. And Nvidia RTX has gained broad industry support, making ray tracing the standard for next-generation gaming.
'The entire reason for Q4 and Q1 is attributed to oversupply in the channel as a result of cryptocurrency,' Huang continued. '[It] has nothing to do with Turing. In fact, Turing is off to a faster start than Pascal was and it continues to be on a faster pace than Pascal was. And so, the pause in gaming is now behind us, we're on a growth trajectory with gaming, RTX took the lead on ray tracing and is now going to become the standard for next generation gaming support from basically every major platform and software provider on the planet.'
While the 68 percent drop in net income may be cause for concern, the fact that it wasn't higher - coupled with promises from Huang that things will improve in the next quarter - appears to have mollified investors: The company's share price settled 1.75 percent up in after-hours trading.
July 1 2020 | 17:34