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NVIDIA Earnings: What to Watch Today After the Market Close

By Beth McKenna - May 21, 2020 at 8:00AM

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NVIDIA's stock has returned nearly 53% so far this year, so the artificial intelligence leader has a lot to prove when it releases first-quarter results.

NVIDIA (NVDA 3.04%) is slated to report its first-quarter results for fiscal 2021 after the market close on Thursday, May 21.

The graphics processing unit (GPU) leader is going into its release on a strong note. Last quarter, its results easily beat the Wall Street consensus estimates for both revenue and earnings. The quarter also marked the company's return to year-over-year growth on both the top and bottom lines after four consecutive quarters of declines.

NVIDIA stock is a tech stock champ once again. It's returned nearly 53% in 2020 through May 20, while the S&P 500 index (including dividends) is down more than 7% over this period. 

A silhouette of a person amid a rendering of a computer motherboard.

Image source: Getty Images.

NVIDIA's key numbers

Here are the year-ago quarter's results and Wall Street's estimates to use as benchmarks. 

Metric Fiscal Q1 2020 Result Fiscal Q1 2021 Wall Street Estimate Projected Growth (YOY)
Revenue $2.22 billion $2.98 billion 34%
Adjusted earnings per share (EPS) $0.88 $1.68 91%

Data sources: NVIDIA and Yahoo! Finance. YOY = year over year.

For the quarter, NVIDIA guided for revenue of $3 billion and adjusted EPS of $1.61.

For context, in the fourth quarter of last fiscal year, revenue jumped 41% year over year to $3.11 billion and adjusted EPS soared 136% to $1.89.  

Platform performance

Here's how the platforms performed last quarter:

Platform

Fiscal Q4 2020 Revenue

Change (YOY)

Change (QOQ)

Gaming

 $1.49 billion

56% (10%)

Data center

 $968 million 

43% 33%

Professional visualization

 $331 million

13% 

2%

Automotive

 $163 million

--

1%

OEM and IP

 $152 million

31% 6%

Total

 $3.11 billion

41%

3%

Data source: NVIDIA. OEM and IP = original equipment manufacturer and intellectual property. QOQ = quarter over quarter.

Last quarter, in her CFO commentary, Colette Kress attributed the gaming platform's year-over-year growth to increased sales of GeForce GPUs and systems on a chip (SoC), professional visualization's year-over-year growth to higher sales of desktop and notebook workstations, and data center's year-over-year increase to higher demand from hyperscale and vertical industry end customers.

These growth drivers probably continued in the first quarter. However, investors can expect that NVIDIA's results in its enterprise-focused businesses were negatively affected in the latter part of the quarter by the widespread temporary shutdowns of non-essential businesses around the world resulting from the coronavirus pandemic.

It's possible the pandemic provided a boost to the company's gaming platform. Many people are home more than usual because of lockdown orders, which is driving an increase in activities such as computer gaming and streaming.

Updates on Mellanox and Cumulus acquisitions 

On the earnings call, investors can expect management to discuss NVIDIA's $7 billion acquisition of Mellanox Technologies, which (finally) closed in late April. The deal with Mellanox, the leading maker of high-performance networking products, was announced in March 2019. 

Management will probably provide some guidance on Mellanox's expected contribution to NVIDIA's top and bottom lines in the second quarter. We already know that "the acquisition is expected to be immediately accretive to NVIDIA's non-GAAP gross margin, non-GAAP EPS and free cash flow," as per the recent press release. 

Management is also sure to touch upon NVIDIA's recent announcement of another acquisition to strengthen its data center platform's offerings. Earlier this month, the company announced plans to acquire network software company Cumulus Networks for an undisclosed sum.

Fiscal second-quarter 2021 guidance

The market looks ahead. So its reaction to NVIDIA's release will probably hinge more on the company's second-quarter outlook than its first-quarter results, relative to Wall Street's expectations.

For Q2, analysts are modeling for adjusted EPS of $1.79 on revenue of $3.15 billion, representing growth of 44% and 22%, respectively, year over year. However, these estimates don't include contributions from the Mellanox or Cumulus acquisitions.  

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