Nvidia's second quarter shows big year-on-year revenue drop

Nvidia has issued its financial results for the second quarter of its early-by-the-calendar 2020 financial year, crowing of sequential growth in both its gaming and data centre businesses even as its overall revenue dropped 17 percent and its net income a massive 50 percent.

According to figures released by Nvidia late yesterday, the company closed the second quarter of its 2020 financial year with $2.579 billion in revenue - down 17 percent year-on-year, but up 16 percent quarter-on-quarter. Coupled with a 350 basis point drop in gross margin, from 63.3 percent in the second quarter of its 2019 financial year to 59.8 percent, and a 19 percent increase in operating expenses, the company's net income is down a whopping 50 percent year-on-year.

Nvidia founder and chief executive Jensen Huang, however, was upbeat. 'We achieved sequential growth across our platforms,' he claimed during the earnings call last night. 'Real-time ray tracing is the most important graphics innovation in a decade. Adoption has reached a tipping point, with Nvidia RTX leading the way. Nvidia-accelerated computing momentum continues to build as the industry races to enable the next frontier in artificial intelligence, conversational AI, as well as autonomous systems like self-driving vehicles and delivery robots.'

While Huang's commentary about the company's minority automotive business growing is most assuredly true, having jumped 26 percent quarter-on-quarter and 30 percent year-on-year, Nvidia's professional visualisation division was the only other to show year-on-year growth. Gaming, which represents the overwhelming majority of the company's income, dropped 27 percent compared to the same quarter last year, while its data centre division fell 14 percent while its general 'OEM and Other' reporting category fell four percent.

Despite these declines, investors appear pleased - thanks in no small part by expectations for growth having been considerably lower: The company's share price closed down 0.87 percent on predicted poor results, then shot up 5.95 percent in after-hours trading - not enough, sadly, to reverse the company's downward one- and six-month pricing trend.