EPS of $0.08 increased by 27.7% from previous year
Gross margin of 64.6%
Net income of 2.04B
""Generative AI drove significant upside in demand for our products, creating opportunities and broad-based global growth across our markets."" - Colette Kress, CFO
NVIDIA Corporation (NVDA) Q1 2024 Financial Results Report: Strong Sequential Growth Fueled by Generative AI Demand
Executive Summary
NVIDIA Corporation reported impressive financial results for Q1 2024, marked by a revenue increase of 19% sequentially to $7.19 billion, although it represented a 13% decline compared to the previous year. The surge in data center revenue, which achieved record highs of $4.28 billion thanks to robust demand for AI and accelerated computing solutions, has significantly contributed to these results. Management cited generative AI as a critical driver of growth, creating unprecedented market opportunities across various sectors, including cloud services and enterprise applications. This performance is set against a backdrop of ongoing inventory corrections within the gaming segment, demonstrating resilience in a challenging consumer spending environment.
Key Performance Indicators
Revenue
7.19B
QoQ: 18.86% | YoY:-13.22%
Gross Profit
4.65B
64.63% margin
QoQ: 21.26% | YoY:-14.42%
Operating Income
2.14B
QoQ: 70.38% | YoY:14.56%
Net Income
2.04B
QoQ: 44.48% | YoY:26.27%
EPS
0.08
QoQ: 45.61% | YoY:27.69%
Revenue Trend
Margin Analysis
Key Insights
**Revenue**: $7.19 billion, up 19% QoQ, down 13% YoY.
**Net Income**: $2.04 billion, up 44% QoQ, and up 26% YoY.
**Operating Income**: $2.14 billion, increased by 70% QoQ.
**Earnings Per Share (EPS)**: Diluted EPS was $0.082, reflecting a 45.61% increase QoQ.
Financial Highlights
### Financial Performance Highlights:
- Revenue: $7.19 billion, up 19% QoQ, down 13% YoY.
- Net Income: $2.04 billion, up 44% QoQ, and up 26% YoY.
- Gross Margin: 64.6% (GAAP); demonstrating significant stability amid cost pressures.
- Operating Income: $2.14 billion, increased by 70% QoQ.
- Earnings Per Share (EPS): Diluted EPS was $0.082, reflecting a 45.61% increase QoQ.
- Free Cash Flow: $2.66 billion, indicating strong cash generation capacity.
### Operational Metrics:
- Data Center Revenue: $4.28 billion (+18% sequentially; +14% YoY).
- Gaming Revenue: $2.24 billion (+22% sequentially; -38% YoY).
- Professional Visualization Revenue: $295 million (+31% sequentially; -53% YoY).
- Automotive Revenue: $296 million (+1% sequentially; +114% YoY).
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
7.19B
-13.22%
18.86%
Gross Profit
4.65B
-14.42%
21.26%
Operating Income
2.14B
14.56%
70.38%
Net Income
2.04B
26.27%
44.48%
EPS
0.08
27.69%
45.61%
Key Financial Ratios
currentRatio
3.43
grossProfitMargin
64.6%
operatingProfitMargin
29.8%
netProfitMargin
28.4%
returnOnAssets
4.6%
returnOnEquity
8.33%
debtEquityRatio
0.49
operatingCashFlowPerShare
$0.12
freeCashFlowPerShare
$0.11
dividendPayoutRatio
4.85%
priceToBookRatio
29.12
priceEarningsRatio
87.38
Net Income vs. Revenue
Expense Breakdown
Management Commentary
#### Key Management Insights:
- Generative AI Demand: "Generative AI is driving exponential growth in compute requirements... creating opportunities and broad-based global growth across our markets." â Colette Kress, CFO.
- Data Center Transition: "The world's $1 trillion data center is nearly populated entirely by CPUs today... accelerated computing is the path forward with generative AI as the primary workload." â Jensen Huang, CEO.
- Product Innovations: "We started shipping DGX H100, our Hopper generation AI system... delivering the promise of NVIDIA DGX to customers from the cloud." â Colette Kress.
"Generative AI drove significant upside in demand for our products, creating opportunities and broad-based global growth across our markets."
â Colette Kress, CFO
"The world's $1 trillion data center is nearly populated entirely by CPUs today... accelerated computing is the path forward with generative AI as the primary workload."
â Jensen Huang, CEO
Forward Guidance
Looking ahead, management provided a positive outlook for Q2 2024, forecasting total revenue of approximately $11 billion, with strong expectations for data center growth driven by ongoing investment in generative AI technologies. Requested gross margins are set to improve to around 68.6% GAAP and 70% non-GAAP, reflecting management's confidence in product demand and operational efficiencies. With substantial supply procured for the latter half of the year, NVIDIA plans to capitalize on the anticipated market dynamics surrounding AI and cloud computing developments.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
NVDA Focus
64.63%
29.80%
8.33%
87.38%
INTC
34.20%
-12.50%
-2.81%
-12.30%
TSM
54.80%
45.50%
6.72%
17.79%
MRVL
42.20%
-9.06%
-1.09%
-50.06%
MU
21.90%
-2.74%
-0.37%
-82.18%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
The investment outlook for NVIDIA looks promising based on their robust Q1 results, strong market position in generative AI, and proactive management strategies in expanding their cloud and data center offerings. Investors should monitor upcoming product launches and partnerships, particularly in the high-growth areas of AI applications. Overall, the long-term growth factors outweigh the short-term risks, making NVIDIA an appealing option for investment in the technology sector.
Key Investment Factors
Growth Potential
NVIDIA's focus on generative AI and accelerated computing positions it at the forefront of a growing market, with significant partnerships and product innovations anticipated to drive future revenue growth.
Profitability Risk
Potential risks include market dependency on cyclical consumer spending, inventory challenges in gaming segments, and volatility in semiconductor supply chains due to geopolitical factors.
Financial Position
NVIDIA maintains a robust balance sheet with total assets of $44.46 billion, equity at $24.52 billion, and $5.08 billion in cash, comfortable to support ongoing operational and investment needs.
SWOT Analysis
Strengths
Leading position in AI and accelerated computing technologies.
Robust financial performance with strong cash flow generation.
Diverse product portfolio catering to multiple industries including gaming and data centers.
Weaknesses
Year-on-year revenue declines indicate potential market saturation in certain segments.
Dependence on cyclical fluctuations in consumer spending, particularly in the gaming division.
Opportunities
Expanding data center deployments powered by AI technology.
Growth in enterprise applications utilizing NVIDIA AI Foundations.
Increasing collaborations with cloud service providers to enhance DGX Cloud offerings.
Threats
Intense competition in the semiconductor space from rivals like AMD, Intel, and emerging players.
Geopolitical tensions affecting global supply chains and manufacturing capabilities.
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