Nvidia stock falls on Q3 revenue miss, weak guidance

Earnings of semiconductor giant Nvidia Corp. (NVDA) surged and topped estimates in the third quarter of 2019 when all the operating segments registered double-digit revenue growth. Meanwhile, total reported revenues and the outlook for the fourth quarter fell short of expectations, driving the company’s stock down 16% in the after-hours trading Thursday.

Adjusted earnings of the Santa Clara, California-based company climbed to $1.84 per share in the October quarter from $1.33 per share a year earlier, beating estimates. Reported profit was $1.23 billion or $1.97 per share, compared to $0.84 billion or $1.33 per share in the third quarter of 2018.

Revenues moved up 21% annually to $3.18 billion helped by a 58% growth in the Datacenter business, which reflected the robust demand for the company’s artificial intelligence solutions. The other segments – Professional Visualization, Gaming and Auto – also registered double-digit growth.

“Our market position and growth opportunities are stronger than ever. During the quarter, we launched new platforms to extend our architecture into new growth markets – RAPIDS for machine learning, RTX Server for film rendering, and the T4 Cloud GPU for hyperscale and cloud,” said CEO Jensen Huang.

Looking ahead, the management expects fourth-quarter revenues to rise 2% year-over-year to $2.7 billion, which is below the consensus Wall Street forecast. Unadjusted and adjusted gross margins are expected to be approximately 62.3% and 62.5%, respectively. The company is looking for operating expenses of $915 million for the January quarter.

Whopping $1.8-billion gaming revenue in Q2 fails to impress NVIDIA investors

During the third quarter, Nvidia returned $1.13 billion to shareholders, comprising share repurchases worth $855 million and $273 million of dividends. The company also raised its quarterly dividend by 7% to $0.16 per share and announced plans to return an additional $3 billion to shareholders through fiscal 2020.

Nvidia shares hit a record high in September this year after witnessing several ups and downs. The stock closed Thursday’s regular trading session up 2.6% but lost sharply after the earnings report.

Get access to timely and accurate verbatim transcripts that are published within hours of the event