Computing giant Nvidia has revealed that its Q2 revenue came in lower than expected, finishing at $6.7 billion compared to its outlook of $8.1 billion.
The figure represents a 19% sequential drop but a growth of 3% over the same period of last year.
In an announcement, the company said the numbers reflect a reduction in channel partner sales, likely due to “macroeconomic headwinds”. Nvidia also implemented pricing programmes with channel partners to reflect challenging market conditions, which it expects to continue into Q3.
Data centre revenue fell short of expectations during the quarter due to supply chain disruptions but did manage to hit $3.81 billion, up 1% sequentially and 61% from 2021.
The overall shortfall, however, is largely down to weaker-than-forecast gaming revenue, the company said, which clocked in at $2.04 billion - down 44% sequentially and a 33% drop from the same period of last year.
Nvidia added that the full results are also expected to show $1.32 billion of charges, which are largely related to inventory and related reserve, based on revised expectations for future demand.
“The significant charges incurred in the quarter reflect previous long-term purchase commitments we made during a time of severe component shortages and our current expectation of ongoing macroeconomic uncertainty,” explained Colette Kress, EVP and CFO of Nvidia.
“We believe our long-term gross margin profile is intact. We have slowed operating expense growth, balancing investments for long-term growth while managing near-term profitability. We plan to continue stock buybacks as we foresee strong cash generation and future growth.”
Commenting on the firm’s decline in gaming sell-through projections, Nvidia founder and CEO Jensen Huang said the firm adjusted its channel prices due to its longer-term expectations.
“As we expect the macroeconomic conditions affecting sell-through to continue, we took actions with our gaming partners to adjust channel prices and inventory,” he said.
“Nvidia has excellent products and position driving large and growing markets. As we navigate the challenges, we remain focused on the once-in-a-generation opportunity to reinvent computing for the era of AI.”
