NVIDIA Corporation ( NVDA Quick Quote NVDA - Free Report) delivered second-quarter fiscal 2022 non-GAAP earnings of $1.04 per share, beating the Zacks Consensus Estimate $1.01. The reported figure also jumped a whopping 89% year over year and 14%, sequentially.
Revenues of $6.51 billion beat the consensus mark of $6.34 billion and surged 68% year over year as well. The top line also climbed 15% on a quarter-over-quarter basis.
The company reported year-over-year revenue growth across its entire end markets. Moreover, the company’s Gaming, Data Center and Professional Visualization markets registered record revenues during the quarter.
Beginning first-quarter fiscal 2021, NVIDIA started reporting revenues under two segments — Graphics and Compute & Networking.
Graphics include GeForce GPUs for gaming and PCs, the GeForce NOW game streaming service and related infrastructure, and solutions for gaming platforms; Quadro GPUs for enterprise design; GRID software for cloud-based visual and virtual computing; and automotive platforms for infotainment systems.
Graphics accounted for 60% of the fiscal second-quarter revenues. The segment’s top-line figure surged 87% year over year and 13%, sequentially, to $3.91 billion.
Compute & Networking represented 40% of the fiscal second-quarter revenues. The segment comprises Data-Center platforms and systems for AI, HPC, and accelerated computing; DRIVE for autonomous vehicles; and Jetson for robotics and other embedded platforms.
Compute & Networking revenues climbed 46% year over year and 18%, sequentially, to $2.60 billion.
Market Platform Top Line Details
Based on the market platform, Gaming revenues (47% of revenues) shot up 85%, year over year, and 11%, sequentially, to $3.06 billion on higher sales across the company’s notebook and desktop gaming GPUs, and game console SOCs.
Revenues from Data Center (37% of revenues) jumped 35% year over year and 16% from the previous quarter to $2.37 billion. This year-on-year upswing was chiefly driven by the ramp-up of its Ampere architecture products into vertical industries and hyperscale customers, along with solid chip demand from hyperscale and large consumer Internet customers.
Professional Visualization revenues (8% of revenues) increased a whopping 156%, year over year, and 40%, sequentially, to $519 million. This growth mainly resulted from increased sales of notebook workstation GPUs and the ramp-up of Ampere architecture GPUs.
Auto revenues (2% of revenues) in the reported quarter totaled $152 million, up 37% on a year-over-year basis. Nonetheless, the division’s sales edged down 1%, sequentially. This year-over-year rise was primarily aided by continued recovery in the global automotive production volumes.
OEM and Other revenues (6% of revenues) climbed an astounding 180%, year on year, and 25%, sequentially, to $409 million. This uptick reflects the inclusion of Cryptocurrency Mining Processors (CMP) revenues under the market platform, which generated sales of $266 million.
NVIDIA’s non-GAAP gross margin expanded 70 basis points (bps) year over year and 50 bps sequentially to 66.7%, mainly on higher average selling price within desktop GeForce GPUs, along with continued growth in high-end Ampere architecture products.
Non-GAAP operating expenses flared up 22% year over year and 6% sequentially to $1.27 billion on higher compensation-related expenses, including headcount increase,and infrastructure costs.
Non-GAAP operating income jumped an astounding 103%, year over year, and 20%, quarter on quarter, to $3.07 billion.
Balance Sheet and Cash Flow
As of Aug 1, 2021, NVIDIA’s cash, cash equivalents and marketable securities were $19.65 billion, up from $12.67 billion as of Jan 31, 2021. The rise displays proceeds from debt issuance worth $5 billion.
As of Aug 1, 2021, total long-term debt (including current maturities) was $11.94 billion, up from the $5.96 billion seen in the previous quarter ended May 2, 2021. This increase reflects debt issuance of worth $5 billion.
The company generated $2.68 billion in operating cash flows, up from the year-ago quarter’s $1.57 billion as well as the previous quarter’s $1.87 billion. Free cash flow was $2.48 billion, up from the prior-year period’s $1.35 billion and from the last quarter’s $1.56 billion.
In the first half of fiscal 2022, the company generated operating and free cash flows of $4.56 billion $4.04 billion, respectively.
NVIDIA paid dividends of $100 million in the second quarter and $199 million in the first half of fiscal 2022.
For the third quarter of fiscal 2022, NVIDIA anticipates revenues of $6.8 billion (+/-2%).
Non-GAAP gross margin is projected at 67% (+/-50 bps). Non-GAAP operating expenses are estimated to be $1.37 billion.
Capital expenditures are expected to be approximately $200-$225 million.
Zacks Rank & Key Picks
Currently, NVIDIA carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader technology sector include
Microsoft ( MSFT Quick Quote MSFT - Free Report) , Cadence Design Systems ( CDNS Quick Quote CDNS - Free Report) and Texas Instruments ( TXN Quick Quote TXN - Free Report) , all carrying a Zacks Rank of 2 (Buy), at present. You can see . the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
The long-term earnings growth rate for Microsoft, Cadence Design and Texas Instruments is currently pegged at 11.5%, 11.7% and 9.3%, respectively.