Nvidia releases quarterly report – 31 percent lower revenues and reduced margins

The graphics card market has long been hot, with data centers, gaming computers and digging for cryptocurrencies all driving demand up sharply. In 2018, Nvidia went from strength to strength, with revenues and margins breaking records. But since Turing’s release, revenues have fallen sharply, something that seems to be holding up.

This is noticeable in connection with Nvidia’s quarterly report for the first quarter of the calendar year 2019. Although the company as such is prosperous, revenues are significantly shaken by a reduction to USD 2.2 billion, corresponding to a decrease of 31 percent compared to the same period in 2018. The absolute largest the decrease is noticeable in the gaming segment, with a revenue decrease of 668 million USD.

The reasons are primarily attributed to fewer deliveries of graphics cards for gaming. Although the figures are better than the fourth quarter of 2018 when revenues decreased by almost 50 percent, discounts and the launch of the GTX 1600 series in the lower price ranges have pushed margins.

This is noticeable in the gross margin, which decreases by 6.1 percentage points to 58.4 percent. At the same time, margins increase compared with the previous quarter, something that is attributed to non-recurring costs for overlay. The worst thing, however, is with the profit before interest and tax, which drops drastically by 72 percent on an annual basis, down to USD 358 million.

Data center revenue fell 10 percent to $ 634 million after key customers reduced their purchases, which is also in line with Intel’s declining revenue in the area. The largest percentage decrease is seen in the sale of systems for digging for cryptocurrencies. Here, revenues decrease by 74 percent to $ 99 million.

The only divisions whose revenues are increasing are hardware for self-driving cars and visualization with Quadro cards. The former rose 14 percent to $ 166 million, while an increase in Quadro desktops and laptops increased by 6 percent to $ 266 million.

It is worth mentioning that Tesla, which has previously been a major customer, has now chosen to invest in its own circuits in its cars. Whether this will be felt on Nvidia’s revenue remains to be seen. Revenue for Tegra as a whole decreased by 55 percent to $ 198 million, but this is attributed to a generally declining sales of gaming system circuits.

However, this is not reflected in the sales of the Nintendo Switch, which is still going strong and recently passed 35 million units sold in two years. The hybrid console is powered by a Tegra X1 from Nvidia. In the near future, Nintendo is expected to unveil new variants of the Nintendo Switch, which are again believed to be based on Tegra circuits.

Finally, Nvidia announces expected revenue of $ 2.55 billion in the second quarter of 2019, to a gross margin of 59.2 percent. This improves revenue compared to the first quarter by 15 percent, but still means a decrease of almost 19 percent compared to the same period the year before.

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