Nvidia Warns Of 44 Percent Drop In Gaming Sales

Nvidia has warned its second-quarter revenue would come in significantly lower than its previous expectations, largely due to a sharp 44 percent quarterly-on-quarter decline.

In preliminary figures, the company said its overall revenue would be about $6.7 billion (£5.5bn) for the quarter, including about $2.04bn in revenue from its gaming unit, which includes high-end graphics cards.

That represented a 44 percent sequential decline and a 33 percent drop from the same quarter a year earlier.

Shortfall

The company said the shortfall from its predicted revenues of $8.1bn in May was largely due to the decline in gaming income, which it attributed to a slowdown in consumer spending amidst broader economic concerns.

The figures also reflect pricing changes that Nvidia implemented in response to challenging market conditions that it expects to continue into the third quarter.

The second-quarter figures are expected to include about $1.32bn of charges related to inventory, based on revised expectations of future demand.

“As we expect the macroeconomic conditions affecting sell-through to continue, we took actions with our gaming partners to adjust channel prices and inventory,” said Nvidia chief executive Jensen Huang.

Purchase commitments

Meanwhile data centre revenues rose 1 percent from the previous quarter and 61 percent year-on-year to $3.81bn.

The data centre revenues, while a record, were slightly short of the company’s expectations due to supply chain issues, it said.

Nvidia chief financial officer Colette Kress said the “significant” charges incurred in the current quarter reflect previous long-term purchase commitments made during “a time of severe component shortages”, as well as the company’s expectations of ongoing economic uncertainty.

The company plans to report its final figures on 24 August.

Post-pandemic slump

Other gaming companies, including Logitech, have also registered sharp sales declines after a period of intense demand for home computing equipment during pandemic lockdowns in 2020 and 2021.

Industry watchers said the gaming revenue decline also probably includes a drop in sales to cryptocurrency miners, whose industry has been hit by a dramatic decline in the value of Bitcoin and other digital coins this year.